Even after the resolution deal, the founder Chairman will continue to have a huge influence over the airline
New Delhi, India, Tuesday, March 12, 2019 —
“Naresh Goyal is not going anywhere,” said a senior executive at a leading budget airline, when asked about the rescue deal in the works at Jet Airways that may see its founder step down.
Read: Indian banks are dangerously close to reliving the Kingfisher disaster with Jet Airways
Goyal To Retain A Significant Stake
Even if Goyal does step down, he will retain a significant stake — though much lower than the present 51 per cent — in Jet Airways and will be among the dominant shareholders along with banks and Etihad Airways. The Abu Dhabi airline at present holds 24 per cent stake in its Indian peer.
Not just that, Goyal and his family may get to nominate up to two representatives on the board, and if he bargains hard, may even land an executive role for his son Nivaan.
“The deal draft that has been shared, is the nth one,” added the executive quoted above, indicating that the final word hasn’t been said.
Read: Jet Airways secures a Rs 2,050 crore loan from PNB
Etihad Agrees To Invest Against Larger Stake In Jet
Another executive in the industry added that Etihad and Goyal have agreed to invest in the distressed airline, but are parlaying for larger control over the company.
But the time is ticking away for the airline.
Jet Airways urgently needs fund infusion and has now defaulted twice. On March 11, the company stated that it has defaulted on repayments against an external commercial borrowing due to the shortage of capital. In December too, it had missed a repayment schedule.
Debt-Ridden Jet Needs To Pay 1700 Cr By March
The company has a debt of about Rs 8,000 crore and needs to repay Rs 1,700 crore by March-end.
One of its biggest priorities will be to bring back its grounded aircraft back to service. According to a PTI report on March 11, Goyal in his letter to Etihad mentioned that 50 of Jet’s 123 aircraft have been grounded. While most of these planes were grounded after the airline failed to pay its lessors, some of the fleets have been kept out of service for want of spare parts.
The airline is also in a spot of bother as patience is running out among its pilots and engineers, who haven’t been paid salaries.
While Goyal has always had a professional CEO running the operations, he has been deeply involved in the affairs of the airline.
Naresh Goyal Was Deeply Involved In Jet Airways
“Top guys in all the departments, including revenue and sales, owe their appointments to Goyal. If a reconstituted board wants to start anew, it will have to make major changes along the rank and file,” said an executive.
Even the pilots union, is said to be close to the present management.
In his letter to the pilots on March 1, Goyal had asked for time till March 18, by which he said that Jet’s senior management would announce the resolution plan. With less than a week to go, approvals for the deal that Goyal mentioned in the letter, need to come fast.
And till then, the question will remain: “Who will manage Jet Airways?”