Ailing full service carrier Jet Airways on Wednesday said that its resolution plan, which contemplates various options including proportion of equity infusion by various stakeholders and the consequent change in the composition of the company’s board of directors, is actively being discussed by lenders as well as other stakeholders.
A TV report earlier in the day said that Abu Dhabi-based Etihad Airways has offered to invest in Jet Airways at Rs 150 a share, along with immediate release of $35 million, after certain conditions are met.
Jet shares crashed 8 per cent in the backdrop of the report to close at Rs 271.
The airline, however, denied the report; “we vehemently deny any discussions or disclosure on our part, with any media concerning the matter,” it said.
Jet Airways, which has a debt of over Rs 8,000 crore, has delayed salaries to a section of its employees, delayed payments to lessors and missed its interest and instalment payments due to lenders on December 31.
The country’s largest full service carrier hit turbulence in the wake of rising operating costs last year as fuel prices rose, and low fares amid cut-throat competition. It has reported losses for past three consecutive quarters.
Etihad currently holds 24 per cent stake in Jet Airways, founder Naresh Goyal holds 51 per cent and the rest is publicly held.
The airline has held talks with various entities to infuse funds, including Tata Group and Etihad, and has also been looking to sell stake in its frequent flyer membership programme. The company has also said it will sell some of the planes that it owns and lease them back.
However, none of the plans have materialised yet.
The consortium of lenders, led by State Bank of India, has met senior management of Jet Airways, to chart a course ahead.
“SBI in consultation with the other members of the consortium and the other stakeholders has been working on a comprehensive resolution plan towards a turnaround of the company for its sustained growth and restoration of financial health... the resolution plan is presently under active discussion among the stakeholders and the various options therein, being privileged and confidential, are yet to be crystallised and agreed to by the stakeholders,” the airline said.
Any bail out by lenders, which may include debt restructuring, may depend on Jet Airways being able to raise fresh funds from its promoters or other investors, it is learnt.
Some reports also suggest that Goyal may have to give up his controlling stake, if Etihad or any other investor were to infuse funds in the airline.
Meanwhile, the civil aviation ministry hopes the airline along with its partner Etihad and lenders are able to reach a common plan to deal with the situation.
Jet Airways has ordered 225 new generation 737 Max airplanes from American plane maker Boeing. These planes, which are more fuel efficient and will be inducted in the airline in phases, are a key part of Jet Airways’s cost reduction plans.
Dinesh Keskar, Boeing’s senior vice president of sales, Asia-Pacific and India, said that so far the cash-strapped Jet Airways had not sought any change in delivery schedule.
“There has been no change so far, no issues with orders,” he said.
Keskar added that whoever gets involved in the airline financially, would want those planes delivered in a timely manner to compete with rivals and maintain its market share.
