Naresh Goyal agrees to step down as Jet chairman

MUMBAI: Naresh Goyal has agreed to step down as chairman of Jet Airways even as the airline was forced to ground six more aircraft due to non-payment of lease rentals.

On Thursday, the airline’s share price fell nearly 6% on opening but recovered to close at Rs 222.8, 1% below its previous close. According to lenders, Goyal’s exit had turned inevitable as he did not fit into any of the resolution plans for the distressed airline that desperately needs a cash infusion from investors.

They said that Goyal’s resignation would make it easier for Jet’s foreign partner, the Etihad group, to move in. However, they could not confirm that a resolution was in sight as several of the impediments to Etihad’s fund infusion still remain.

The conditions put forward by Abu Dabhi’s flag carrier include a demand that Goyal pledges his shares with the banks to raise money—a demand Goyal has been opposing. They also want Goyal to use his holdings in Jet Privilege as security to raise funds for the airline. Besides bringing in the capital, the move would also result in reducing the promoter’s influence in the airline.

With Tata’s pulling out of the race to acquire Jet, Etihad is the only investor in a position to submit a resolution plan. However, even if there is an agreement between Goyal and Etihad on all issues, it won’t be a smooth ride. The Gulf-based airline has asked Jet’s lead banker, State Bank of India, to help them obtain a special dispensation from Sebi exempting them from making an open offer for acquiring the airline’s shares.

On February 14, Jet Airways’ board had approved a bank-led provisional resolution plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Its shareholders have also approved the conversion of loan into shares and other proposals during the extraordinary general meeting on February 21. One resolution plan put forward included a rights issue of Rs 4,000 crore which would see capital infusion by the banks and the National Investment and Infrastructure Fund. However, this plan has not been supported by Etihad.

Eithad, which owns a 24% stake in Jet Airways, is reluctant to provide interim funding until a final resolution plan is in place. Downgrading the company in January 2019, rating agency ICRA said that besides defaulting on loans, the airline had failed to take steps needed to infuse liquidity. The company has been delaying its employee salary payments and lease rental payments to the aircraft lessors. Furthermore, the company has large debt repayments amounting to Rs 1,700 crore between December 2018 to March 2019.