Bankruptcy is the “last option” for Jet Airways, State Bank of India’s (SBI) chairman said on Wednesday, adding that it might still be possible to draft in a new investor to keep the airline flying.
“We believe it is in everybody's interest that Jet Airways continues to fly,” SBI chairman Rajnish Kumar told reporters after meeting government officials, adding that placing Jet into bankruptcy would mean grounding the airline.
The SBI chief said that a resolution plan was “almost” ready and that it would not involve a bailout for any individual, including the airline’s founder and chairman Naresh Goyal.
On Wednesday, the SBI chief met finance minister Arun Jaitley along with aviation secretary Pradip Singh Kharola and principal secretary to Prime Minister Nripendra Misra.
Kumar said the meeting was to appraise the government, which is an important stakeholder, about the current situation at the stricken airline.
Sources said Jet Airways lenders’ resolution plan may include changes in management as they feel it is not possible to run the company with the present management.
The lenders want the airline to be run by a professional who will be given the task of turning the airline around in the next two to three months.
Jet has around Rs 7,650 crore in debt, and owes money to banks, suppliers, pilots and lessors — some of whom have started terminating leases with the carrier.
Jet shareholders at an extraordinary general meeting on February 21 had passed a special resolution under which it was agreed to issue 11.4 crore share to the lenders for an aggregate consideration of Rs 1, meaning Jet’s debt would get reduced by Rs 1 even as the lenders would get to control 50 per cent of the company.
This bank-led resolution plan would bring down the stake of Goyal to 25 per cent and that of UAE’s Etihad to 12 per cent.
Etihad currently holds 24 per cent in Jet, while Goyal holds 51 per cent.
Abu Dhabi-based Etihad has stated to the SBI that it will not pursue any further investments in Jet. It wants to completely exit the airline and wants lenders to buy its share in the company at a lower price of Rs 150 per share.
Analysts said the clear signal coming in was that Jet had to be saved and this was more important than the promoter. Another airline cannot be allowed to go down at this juncture, as it would have a significant impact on the economy and jobs.
“The promoter Goyal and Jet Airways cannot coexist and it seems certain one of them will have to exit… Banks will have to decide who is more critical for a turnaround,” Kapil Kaul, South Asia chief for the Centre for Asia Pacific Aviation, said.
“Our interest is in Jet Airways, not the promoters, our interest is not with any other partner...but the dialogue with Etihad...is on, it is not that they have conclusively decided that they will go out,” Kumar said, adding that there are certain conditions which Etihad wants to be fulfilled like the airline should be professionally managed without any interference.
As many as 47 aircraft of the full service carrier are on the ground now as the company failed to pay rentals to lessors.
Shares of crisis-hit Jet Airways plunged nearly 7 per cent on Wednesday after the company grounded six more planes due to non-payment of lease rentals.
The stock tumbled 6.59 per cent to Rs 213.95 on the BSE. On the NSE, the shares cracked 6.93 per cent to Rs 213.35.
The Telegraph
