July 1, 2022

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Banks may infuse funds into Jet Airways


Banks are likely to infuse fresh funds into cash-strapped Jet Airways if……there is a big IF.

It is whether major shareholders of the airline – Etihad and Founder Chairman Naresh Goyal- would like to pledge their shares as collateral security.

With Jet Airways unable to get fresh funds, the options are becoming limited now.

The Company is struggling with acute financial woes that has resulted in grounding of a significant number of planes, defaulting on debt and lease repayments and delay in payment of salaries to pilots and other senior officials.

Founder Chairman Naresh Goyal and his family owns around 52 per cent stake in Jet Airways while Etihad, a strategic partner, has 24 per cent shareholding.

A consortium of lenders, led by the State Bank of India (SBI), is working on a resolution plan for Jet Airways, which has a debt burden of more than Rs 8,200 crore.

Earlier, sources said that Goyal had agreed to pare down his holding to 22 per cent as part of securing a deal to bailout the airline.

Last week, a senior SBI official expressed hope that resolution should be finalised in a week or so.

On February 14, Jet Airways board approved a bank-led resolution plan whereby lenders would become the largest shareholders in the airline. Following approval from the shareholders, part of debt would be converted into 11.4 crore shares at a consideration of Re 1 apiece as per the RBI norms.

Since January, Jet Airways has defaulted thrice on payments to its debenture holders.

So far, the finance ministry has maintained arm’s length in the matter due to its commercial nature and creditors and debtors are working on the resolution plan, according to sources.

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