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Last Updated : Mar 25, 2019 08:18 PM IST | Source:

Naresh Goyal steps down from Jet Airways board, ceases to be Chairman

Naresh Goyal and his wife Anita Goyal had founded Jet Airways in 1993.

Moneycontrol News @moneycontrolcom

Jet Airways Founders Naresh Goyal and wife Anita Goyal have stepped down from the board of the cash-strapped airline on March 25. With this, Naresh Goyal ceases to be Chairman.

Apart from the Goyals, one nominee of Etihad Airways PJSC, Kevin Knight has also stepped down from the board, Jet Airways said in a notification to the BSE after its board meeting today. Two nominee directors representing lenders have been inducted into the board.

"For the sake of my family of 22,000 employees and their respective families I have today taken the step of stepping down from the Board of Jet Airways," Goyal said in a statement.


"I became the Chairman on 1st April, 1992 and my family is behind me and with me in this decision and I hope you will support my decision too. I will miss you one and all," he added.

The board also approved the issue of 11.4 crore equity shares to the lenders upon conversion of Re 1 of the outstanding debt. Lenders will infuse up to Rs 1,500 crore via debt instruments.

The board also approved the constitution of an Interim Management Committee to manage and monitor the daily operations and cash flow of the company.

"The Rs 1,500 crore is a fully secured, priority, interim funding for two months which we believe is good enough to normalise operations of the airline before it is sold Jet as a going concern," SBI Chairman Rajnish Kumar told CNBC-TV18 in an interview. "In return, lenders are getting a 51 percent stake, which itself is worth over Rs 1,500 crore," he added.

Joint venture partner Eithad's stake will be brought down to 12 percent from 25 percent and Naresh Goyal will now hold 25 percent, Kumar said.

Expression of interest for bids will be floated by April 9 and the deadline for binding bids is April 30, Kumar said, adding, a new investor is expected to be on board by May 31. "There is no legal bar on anyone with a funding and revival plan in place. The option is open for anyone including Naresh Goyal and Etihad to bid for the stake," Kumar said.

Moneycontrol had on March 20 reported that Jet Airways' lenders led by SBI had worked out an alternate rescue plan for the debt-ridden airline, which involves taking majority control and reconstituting the entire board of the country’s second-largest carrier.

With just six days left to the end of this financial year, lenders were in a rush to seal a resolution plan. They had asked Goyal to step down immediately and make way for new management.

Saddled with a debt of over $1 billion of debt, Jet Airways has been struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of which have forced the airline to ground as many as 40 planes.

Repayment of dues

Jet Airways said it will use the fresh funding to partly repay its stakeholders.

"The airline will leverage the funding to partly clear pending dues towards lessors, vendors, creditors and employees in a phased manner. The move will see Jet Airways re-deploy several of its grounded aircraft back into its network," the company said in a statement Monday evening.

An Interim Management Committee (IMC) has been constituted to oversee the overall financial and operational performance of the airline under the overall supervision of the Board of Directors with the support of McKinsey & Co, added the statement.

Meanwhile, there are also worries over 200 pilots of Jet may resign.

The pilots have offers from SpiceJet or IndiGo, sources told Moneycontrol. The airlines have promised the pilots a base city of their choice, apart from a two-month base salary as a joining bonus, they said.

The pilots may be inclined to take up the SpiceJet offer as the airline's aircraft mix is similar to that of Jet Airways'. On the other hand, accepting an IndiGo package means the pilots will have to undergo retraining which may require them to sign a three-year bond to service the carrier, sources said.

There are also talks of new investors including Tata Sons being approached, but a source told Moneycontrol it will take at least a couple of months to bring them in, as regulatory norms require due diligence on the part of the lenders too.

Jet Airways has survived a near-death experience once before; in 2013, Abu Dhabi's Etihad Airways injected $600 million of capital for a 24 percent stake in the airline, three London Heathrow slots and a majority share in its frequent flyer programme. The infusion helped the airline pare down its debt and fight growing domestic competition.

Commenting on the latest development, Ajay Singh, Chairman and Managing Director of SpiceJet said, "Today is indeed a sad day for Indian aviation. By launching a truly world class airline, Naresh and Anita Goyal made India proud. This is also a wake-up call for Indian policymakers. We urgently need to address structural challenges that make India’s airlines uncompetitive to airlines around the world."

Shares of Jet Airways jumped over 15 percent on the BSE to end at Rs 260.

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First Published on Mar 25, 2019 03:40 pm
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