Jet Airways founder Naresh Goyal quits as chairman

New investor (RPT) by June 1

An immediate crisis in India’s second-biggest airline, Jet Airways, was averted after Naresh Goyal stepped down from its board on Monday and the debt-laden carrier got a Rs 1,500-crore funding promise from a consortium of bankers, who would take its control until a new investor is roped in.

The fund will be provided to the airline within this week, State Bank of India chairman Rajnish Kumar said. SBI is leading a consortium of banks which has prepared a resolution plan under which banks will subsequently acquire a 50.1% stake in the airline by issuing 11.4 crore new shares.

This move will reduce Goyal’s stake in Jet Airways to 25% from 51%, while Abu Dhabi-based Etihad Airways’ stake will come down to 12% from 24%.

The lenders will nominate their own representatives on the reconstituted board of Jet Airways from private and public sector banks. The two nominees of Jet Airways, including its CEO Vinay Dube and one of Etihad Airways, continue on the board.

Along with Goyal, his wife Anita and Kevin Knight, nominee director of Etihad Airways quit the board on Monday.

Lenders are also expected to come up with the name of a working chairman for the airlines.

Names of former SBI chairmen Arundhati Bhattacharya and Janaki Ballabh are doing the rounds for the chairman’s post.

A formal announcement in this regard is awaited.

The SBI chairman said the process to find a new investor in the airline will be completed before June 1. Goyal and Etihad will also be eligible to bid for the takeover when SBI issues an expression of interest next month.

The crisis in the airline was averted after the government asked the banks to help it from being pushed into bankruptcy and prevent thousands of job losses ahead of elections.

Last week, after meeting Finance Minister Arun Jaitley and PMO officials, the SBI chairman had said that it was in the interest of the nation and the public that Jet Airways was kept afloat.

Jet Airways has a debt of around Rs 8,000 crore. It has only 38 operational planes left in its fleet of 119 and the pilots, who have not been paid since December, have threatened to go on strike from April 1. The airline has suspended operations on 13 international routes.

Sixty-nine-year-old Goyal, one of India’s 100 richest men, who founded Jet Airways 25 years ago, said in a parting note, “For me, 22,000 employees of Jet Airways are my own family, no sacrifice is too big for me to safeguard their interest. For the sake of Jet employees and their families, I am today stepping down from the Board of Jet Airways.”

Reacting to the development, Jaitley said, “India needs more airlines otherwise air fares will rise. Banks have kept self-interest in mind by trying to keep it as a going entity so that they can recover their dues. I am happy with this decision”.