Jet Airways Founder Naresh Goyal Steps Down As Chairman

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MUMBAI — Jet Airways promoter and founder Naresh Goyal on Monday resigned from the company’s board in the wake of the debt crisis. His wife Anita Goyal also stepped down from the board of the company.

The resignation followed the airline board’s meeting in Mumbai on the day to decide on ways to procure interim funding as well as the future role of Goyal.

Sources said Goyal tendered his resignation at the emergency board meeting. “The main agenda, however, is to get interim funding,” said a source.

It was expected that after the meeting the State Bank of India, which is the lead lender of the consortium of bankers that lent to the airline, will infuse more funds.

According to industry estimates, Jet’s total debt stood at Rs 8,000 crore. The company urgently needed funding to maintain whatever was left of its market shares, even as the airline pilots and crew were said to be approaching other airlines for employment.

The airline’s pilots along with engineers and other highly critical segments of employees have not been paid salaries from January 1, sources said, adding only 12.5 per cent of December pay was given.

Goyal’s stake will be cut to 25.5 per cent from the current 51 per cent, while Etihad Airways’ stake in the debt-laden carrier will also be halved to 12 per cent to make room for the banks to take a controlling stake of 50.5 per cent in the airline, one of the TV channels, ET Now, reported, citing unnamed sources.

The debt-laden Jet Airways also said it will get up to Rs 1,500 crore from lenders in form of debt instruments.

Saddled with debt of more than USD 1 billion, Jet owes money to banks, suppliers, pilots and lessors – several of whom have started terminating leases with the carrier.

The government has asked state-run banks, led by SBI, to rescue Jet without pushing it into bankruptcy, two people within the Indian government have told Reuters that Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election.

The reports of Goyal’s departure led to a rally in Jet’s shares of more than 12 per cent.

Meanwhile, the Jet Airways stocks jumped 12 per cent on Monday afternoon following reports on Naresh Goyal’s resignation from the company’s board.

 


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