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Naresh Goyal, Etihad close to Jet resolution plan; outcome likely in a week

Surajeet Das Gupta & Abhijit Lele/New Delhi/Mumbai 15 Mar 19 | 10:48 PM

Jet Airways promoter Naresh Goyal and his joint venture partner Etihad Airways are close to hammering out an agreement on the banks-led resolution plan and the outcome is expected within a week, sources in the know said.

“We are hopeful that Jet Airways will have a resolution in a week. Intense negotiations are going on. It is our desire that the airline keeps running — that is the fundamental difference between Jet and other NPA (non-performing asset) accounts," a senior executive of one of the banks involved in the restructuring of the airline said. The banker added that they were working on a “comprehensive solution and not a patchwork".

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The two partners have already agreed upon a Rs 4,000-crore interim financing plan according to which Etihad will put in Rs 750 crore either on its own or from an offshore or onshore lender, and a matching amount will be provided by the Jet lenders. Goyal has agreed that Jet Airways will pledge 34.9 per cent of its shares in Jet Privilege (JPPL) to Etihad and the lenders for this interim loan. Jet Airways owns a 49.9 per cent stake in the loyalty programme company, while the rest is held by Etihad. 

According to estimates, the valuation of the pledged share is around Rs 1,700 crore, providing adequate security for both the banks and Etihad, who will arrange interim finance to get the company out of the woods. To smoothen the process, Jet Airways has also received permission from the Ministry of Civil Aviation to pledge its shares in JPPL.

ALSO READ: SBI confident of finalising resolution plan for Jet Airways next week

However, talks are on to resolve the differences between Etihad and Goyal on a contentious clause that limits the shareholding of the promoter to 22 per cent. The foreign carrier has been insisting that Goyal should not be allowed to increase his stake beyond this cap, and should also have a limit of nominees to the board at two. Goyal, however, has signed the memorandum of understanding on condition that the “perpetuity" clause will be removed and there would be no cap on promoter investment as well as a cap on the number of nominee directors if and when they increase their shareholding. 

A senior executive of a bank that is part of the lending consortium, however, points out that the issue is not that contentious that it cannot be resolved and is not a deal breaker.

Jet is in serious trouble with over 59 aircraft of its fleet being forced to be grounded due to its inability to pay lessors. 

ALSO READ: Jet Airways crisis: Flyers rage over flight cancellation, some back boycott

Goyal has warned that the airline could be grounded if interim financing, which was expected to be disbursed early this week, does not come soon. Jet has already defaulted on an ECB repayment of $31 million on March 11 and is staring at yet another default of $109 million on March 27, which is payable to HSBC Bank.

Some lessors to end deals with airline

Some lessors of Jet Airways have begun terminating lease deals over unpaid dues and are preparing to move the leased planes abroad, escalating a crisis for the cash-strapped carrier, five sources with knowledge of the matter told Reuters. Two lessors have applied to the Directorate General of Civil Aviation, the aviation regulator, to deregister at least five planes leased to Jet, three of the sources said.


Pilots seek govt help to recover salaries

Jet Airways' pilots union has, for the first time, sought the government’s help to recover pending salaries and dues from the airline after their pleas to the management have fallen on “deaf ears." In a letter to the labour minister, the National Aviators Guild, which represents the majority of Jet’s pilots, has asked the airline immediately pay their outstanding salaries and allowances to date with interest.


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