New Delhi: Is it cul de sac for Jet Airways? Naresh Goyal, chairman of the debt-ridden airline company has resigned from his post. Meanwhile, Anita Goyal, wife of Naresh Goyal, has distanced herself from the board.
Jet Airways will get financial help from banks up to Rs 1,500 crore immediately. The banks will nominate two members in Jet Airways’ board of directors and will form an interim management committee for daily operations of the airline.
SpiceJet managing director Ajay Singh has termed the latest developments in Jet Airways as tragic. He said this was a “very sad day” for the aviation industry. Naresh Goyal and Anita Goyal, Singh said, had raised the value of India by introducing a world class airline. This is an alarm for economic policymakers, he added.
Jet Airways’ control is still with Goyal who has a 51% stake in the company. Abu Dhabi-based Etihad Airways has a 24% stake.
Due to the lack of funds, Jet Airways grounded more than 40 aircraft in the past few days. The debt on Jet Airways is to the tune of Rs 8,200 crore. It will have to repay lenders Rs 1,700 crore till March end.
Why Naresh Goyal resigned
Gulf airlines Etihad Airways is going to invest between Rs 1,600 and Rs 1,900 crore to bail out Jet Airways, which is struggling with a cash crunch. With this investment, they put forth the condition that Goyal would have to resign as chairman of Jet Airways’ board.
The pressure for Goyal’s resignation was increasing also due to the banks, which had their loans to recover from Jet Airways.
Jet Airways shares up 17%
The news of Naresh Goyal’s resignation shot up Jet Airways’ stock by up to 17%. During the business of the day, the share price of Jet Airways reached Rs 266 while the market share closed at the price of Rs 254.50.
Such a huge increase in Jet Airways shares was seen almost two months ago. Jet Airways shares are on a 52-week high of Rs 650.50 while the minimum level is Rs 163. At present, the company’s market cap is 2,891.05 crore.
SBI to help
Last week, the State Bank of India (SBI), the country’s largest bank, had indicated it would relieve Jet Airways from debt. Rajnish Kumar, chairman of the SBI, met Finance Minister Arun Jaitley and finance secretary Pradeep Singh Khurla and principal secretary to the Prime Minister Nripendra Mishra on Wednesday.
The SBI chairman insisted that Jet Airways should be operationalised in the interest of lenders and consumers. Making Jet Airways seek closure through the Insolvency and Bankruptcy Act (IBC) was the last option, he said.
100+ Jet Airways pilots get jobs
Due to the crisis in Jet Airways, more than 16,000 pilots are facing a job crisis. In fact, the company owes them the promised salaries and perks too.
Although Indigo has employed more than 100 pilots of Jet Airways to lessen the salary crisis, these are Boeing 737 commander-level pilots. The pilots of Jet Airways had warned on Tuesday, if their salary was not paid till 31 March, they would stop the operations of the flights.