Naresh Goyal exits Jet Airways board as lenders take control

Its main lender State Bank of India reportedly agreed to infuse ₹15 billion into the private carrier to help it stay afloat.

The consortium of banks, led by SBI, may invoke the entire 51 per cent stake of Naresh Goyal in the airline, said a report by The Economic Times.

The lenders will nominate two directors to the Jet board and will shortly initiate an auction process to find a new strategic investor for the company.

Lenders to undertake a bidding process for its shares.

Read Also: Jet Airways founder Naresh Goyal, wife Anita resign from board Jet was seen as India's finest airline after the government nationalized the Tata group-founded Air India. "No body is barred from bidding or taking over the airline as per the rule", he said.

Even as news of Goyal's departure led to a rally in Jet's shares, which ended the day 12.4 percent higher, analysts say there is still a long road ahead.

Also, the banks have converted only 1 rupee ($0.0145) of their debt into equity. Many of its pilots and other support staff have also not been paid salaries for several months, according to media reports.

Jet has survived collapse once before when it got close to running out of cash in 2013. On that occasion, Abu Dhabi's Etihad Airways bought a 24 percent stake in the airline to keep it running.

But competition from low-priced carriers, such as IndiGo and SpiceJet Ltd, together with high oil prices, hefty fuel taxes and a weak rupee piled on the pressure in recent months.

At present, Jet Airways is operating with just 41 planes out of its fleet of 119 planes after failing to repay rentals.

Saying that the development was a wake-up call for Indian policymakers, SpiceJet chairman and managing director Ajay Singh said there was an urgent need to address structural challenges in the aviation sector.

The financially-struggling airline also announced the constitution of an Interim Management Committee "at the instructions of the lenders to manage and monitor the daily operations and cashflow of the company". "By launching a truly world class airline, Naresh and Anita Goyal made India proud", Singh said in a statement.

  • Wendy Palmer