State Bank of India (SBI) will meet with Jet Airways Chairman Naresh Goyal and the domestic carrier’s significant shareholder Etihad Airways’ CEO Tony Douglas on February 27 to discuss potential solutions for the debt-laden airline, sources said.
The meeting will be held at SBI’s office in Mumbai. SBI looks to sort out the differences persisting Goyal, the lenders and Etihad, which has 24 percent stake in Jet Airways.
SBI is the lead lender of a consortium that has extended loans to Jet Airways.
The two carriers have also expressed confidence that once the plan is implemented, Jet Airways would re-emerge as a viable and robust airline to reclaim its rightful place as airline of first choice for its customers.
The joint statement has been issued by Goyal and Douglas.
Jet Airways, which has been in operation for over 25 years and has been grappling with financial woes. It is looking to rejig debt as well as raise funds.
Officials said Goyal has not agreed to Etihad’s demands that he should pledge his shares in the airline as well as in the loyalty programme, Jet Privilege, with lenders to raise funds.
Another bone of contention is that the Gulf carrier wants Goyal to be the sole promoter of Jet Airways but without board representation and management control, sources said.
There have also been some differences between the lenders and Etihad. This includes the airline’s demand that it should be exempted from any open offer requirement from Sebi in case its stake in Jet Airways is hiked.
Lenders had originally proposed a rights issue of shares worth Rs 4,000 crore, in which SBI and other banks could have infused Rs 600 crore and NIIF Rs 1,400 crore for shares of the airlines. However, Etihad wants a rights issue worth Rs 5,000 crore while expecting SBI-led lenders and NIIF to bring an additional Rs 1,000 crore.
Etihad wants keep its contribution to Rs 1,400 crore. Besides, it does not want to pledge its shares to raise funds and also does not want to be classified as a promoter in the company.
On February 14, Jet Airways board had approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Its shareholders have also approved conversion of loan into shares and other proposals during the Extraordinary General Meeting (EGM) on February 21.
On February 25, SBI also said that there has been no decision against the National Company Law Tribunal (NCLT) against Jet Airways.
However, officials associated with the lenders and key shareholders have said SBI has considered various options, and has eventually moved the tribunal seeking insolvency proceedings, in case any attempts to recover its loans fail to yield desired results.
In their joint statement as reported by Moneycontrol, Goyal and Douglas had said rising oil prices, a depreciating rupee and market saturation, among other things, have combined to critically impact the civil aviation sector as a whole.
They said that some airlines have been hit harder than others, specifying Jet Airways, India’s premier full-service airline, to be one of them.
The statement further said Jet Airways’ network load factor has gone up to a high of 87 percent through December 2018 and January 2019. Flight cancellation rate in December has also stood at 0.2 percent — the lowest among Indian carriers.
