Naresh Goyal, who stepped down as the chairman of Jet Airways, the full service carrier he founded more than two decades ago, says that the airline would fly out of the troubles it has faced in the last few months and it was the right time to hand over the reigns to new leaders who would take the airline to greater heights.
“Our airline, today, stands poised to turn the page, ready to fly out from the turbulence of recent months and soar forth into a bright new future. Our shareholders have approved the Bank-led Resolution Plan (BLRP), which marks a definitive step in our efforts to guide Jet Airways onto a sounder and sustainable financial footing. There is light at the end of the tunnel and that is why I feel; the time is now right for us to hand over the reins of your preferred airline to a new generation of leaders that I am certain will take Jet Airways to even greater heights,” Goyal said in a letter written to Jet Privilege members.
Hit by rising operating costs, low air fares, Jet Airways reported a loss of Rs 3,208 crore over the April-December 2018 period. Its operating only with a third of its fleet. Many planes were grounded as it could not pay lessors, it has delayed salaries and it also missed interest payments to bond holders recently. Many of its services were cancelled due to the limited availability of airplanes.
Goyal had held 51 per cent stake in the carrier, while Abu Dhabi-based carrier Etihad had held 24 per cent stake. On Monday, Goyal and his wife Anita agreed to step down from the board, paving the way for the lenders to take control of the airline.
The lenders get 11.4 crore equity shares upon conversion of one rupee of the outstanding debt, which will give them a 51 per cent stake in the airline. The lenders will immediately inject Rs 1,500 crore into Jet Airways and start a bidding process to find a new investor, which is expected to be completed by June. Goyal and Etihad could still bid for the airline once the formal process kicks off.
“I would be lying, if I said this was not an emotional moment for me. Jet Airways, its employees both past and present, shareholders, partners, regulators, and most importantly you our JetPrivilege members, are our family and there is no sacrifice I would not make to ensure the best interests of our Jet Airways family are safely secured,” Goyal said in the letter, adding it was not an end of the journey, but a start of a brand new chapter.
He said separately that he had decided to step down for the sake of his family of 22,000 employees.
Meanwhile, an interim management committee has been constituted to oversee the overall financial and operational performance of the airline under supervision of the board of directors with the support of consulting firm McKinsey & Co.
Apart from the Goyals, Kevin Knight, one of the two nominees of Etihad also stepped down from Jet Airways’ board. Two lender nominees will be inducted into the board and the two nominee directors of the promoter and one nominee of Etihad will remain on the board.
The funds being infused by lenders will be leveraged to partly clear pending dues towards lessors, vendors, creditors and employees in a phased manner.
This should help Jet Airways redeploy several aircraft that have been grounded back into its network and restore normal operations.
Investors have so far given a thumbs up to the restructuring. The stock, which had crashed 60 per cent over the past one year, was up 8.1 per cent at Rs 275 on Tuesday, a day after it had soared 12 per cent.
Investment bank Citigroup said the restructuring could provide support and help Jet Airways regain some market share it had lost to rivals as its operations had been disrupted significantly.
