By now we all know that one of the country’s premier airlines, Jet Airways, is in the doldrums. With a debt of over 8,000 crore ₹, which it is being unable to service, to the fact that two third of its fleet of aircrafts have been grounded by lessors for non-payment of fees and add to that, the airline has not paid its staff and pilots their salary for months, who are now threatening to go on strike, and over 250 pilots and captains are mulling their options to join rivals Spice Jet and Indigo.
With less than three weeks left for the Lok Sabha Elections, it is even in the best interest of the government to find a solution for a company with 23,000 employees.
In spite of all its troubles, Jet Airways itself, nor have any of its creditors, moved bankruptcy court to initiate insolvency proceedings via the IBC route against the airline, which would take a long time and leave it with practically no chance of revival.
However, being faced with a severe cash crunch, Jet Airways defaulted on a domestic loan repayment in December. According to RBI regulations, lenders must resolve cases pertaining to defaulting companies such as Jet within 180 days of their first default; which in the case of the Naresh Goyal led airline began on 1st January 2019.
The consortium of lenders to Jet Airways, led by SBI, are finalising a plan that will involve providing an emergency funding of 1,500 crore ₹ in an attempt to bring it back to 100% operating capacity. This seems to be a transitory arrangement in which the lenders will acquire control of the airline until they can find an investor and sell their stake via an open auction process over the next two months in an attempt to maximise their value.
Jet Airways held an all important board meeting today in London and many crucial issues were discussed. The outcome of the meeting was however, on expected lines. Founder Chairman Naresh Goyal and his wife Anita Goyal have stepped down from the board of the airline and his shareholding has now been reduced to 25.5% from 51%, thereby relinquishing control in the airline he founded 25 years ago.
Jets Strategic partner Etihad, who previously threatened to sell its entire 24% stake for a throwaway price of 150 ₹ per share, has finally decided to stay on and its shareholding has now been reduced to 12%.
The lenders have converted their debt into equity and now hold 50.5% shareholding in the newly constituted board.
Shares of Jet Airways, on the back of this news, rose 12.41% to end the day’s trade at 254.10 ₹ per share.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.