Banks to become largest shareholders, but not promoters, says Jet Airways

Naresh Goyal (Image: Reuters)

While lenders will become the largest shareholders after the allotment of shares, distressed airline Jet Airways on February 15 said the banks won't be its promoter.

At the same time, senior executives  - talking to analysts during a conference call to discuss the airline's third quarterly results - side stepped questions on who the promoter will be.

"The promoter will be the Chairman of the Board," said CEO Vinay Dube. When pressed again, he said, "Jet Airways will continue the structure of a professionally run management reporting to the Board of Directors."

The answer throws up further questions on who will control the airline following the allotment of fresh equity, an integral part of the turnaround plan. Banks will be allotted 114 million shares. This will reduce Chairman Naresh Goyal's stake to about 25 percent, from the present 51 percent. Also, Etihad's stake will come down to about 12 percent, from 24 percent. The banks, thus, will become the largest shareholders.

But the shareholding pattern may still change if Etihad  - as is expected - puts in more equity and brings in an Indian partner. Though it wants to be exempt from giving an open offer, which will get triggered if its stake goes beyond 25 percent, Etihad's stake could go as high as 45 percent.

Would it mean that Etihad will take control of the airline, and its representative may take the Chairman's post?

On the other hand, Goyal may continue to want to have a say in the airline he founded in 1992. A senior executive from the industry earlier told Moneycontrol that Goyal may insist on having a family member, possibly his son Nivaan Goyal, on the board of Jet Airways.

But will he, or his relative, get the Chairman's seat?

Better clarity will come after February 21, when the shareholders meet to vote on the resolution plan.

Monetising assets

An important part of the resolution plan is to monetise its assets.

The airline was expected to dilute its stake in its loyalty programme Jet Privilege. But it has now gone on the back burner.

"We will continue to look...but not immediately, but in a later stage," said Deputy CEO and CFO Amit Agarwal.

On the other hand, he said the airline has identified a potential buyer for sales, and sale and leaseback of aircraft. "It is part of the resolution plan," said Agarwal.

The airline owns 16 of its 124 aircraft. There is a debt repayment obligation of Rs 1,700 crore on these 16 aircraft.

Jet Airways' total debt stood at Rs 7,654 crore.

The plan estimates a funding gap of around Rs 8,500 crore to be met by an appropriate mix of equity infusion, debt restructuring, sale/sale and leaseback/refinancing of aircraft, among other things.