Lenders want Jet Airways to fly on without Etihad in cockpit

Lenders of Jet Airways aren’t distinctly enthused by Etihad Airways’ offer to pick up a controlling stake in the troubled Indian airline.

Published: 18th January 2019 07:10 AM  |   Last Updated: 18th January 2019 07:10 AM   |  A+A-

Jet Airways

A Jet Airways aircraft sits on the tarmac (File Photo | Reuters)

By Express News Service

HYDERABAD: Lenders of Jet Airways aren’t distinctly enthused by Etihad Airways’ offer to pick up a controlling stake in the troubled Indian airline. Instead, they appear to be leaning towards promoter Naresh Goyal’s Rs 700-crore capital commitment, made out of compulsion, but with strings attached. The banking consortium, led by SBI, may even lend more to keep the airline afloat. “A resolution will happen with the consent of Goyal and Etihad,” a senior banker told TNIE. “We are willing to lend more depending on the need.” 

When asked if Etihad’s offer to pick up additional stake at a deeply-discounted price, besides offering emergency capital, was off the table now that Goyal is willing to give money, the official said, “No, there’s no question of it.” Perhaps, lenders are sticking to the script, where aviation norms stipulate that ownership should remain with an Indian entity. In fact, civil aviation secretary R N Choubey reaffirmed on Wednesday that ownership and control of Jet Airways would need to remain in domestic hands. 

However, lenders are open to capital infusion by Etihad, as long as its stake doesn’t breach the 49 per cent limit. Sources in SBI also confirmed that the proposed restructuring plan, ‘to ensure long-term viability of the company,’ includes rolling over payment terms of both principal and interest to free up cash flows, raising more capital, and if the existing debt can be converted into equity.

However, the official didn’t confirm how comfortable lenders are with Goyal’s condition of retaining 25 per cent stake in the company.  “Everybody committing capital will put their own desires and conditions... we will discuss it,” he said. 

Creditors are not only in the saddle at Jet Airways, but also have a grab-bag of offers —from Goyal, Etihad, and reportedly Tatas — to choose from. But banks will have a fresh problem at hand, should management control slip out of the current promoters (if Goyal brings in another strategic partner), and to an entity with no prior expertise in running an airline. “That’s why we are discussing various options including debt-restructuring, long-term sustainability... nothing was conclusive at Wednesday’s meeting. Nor was Etihad’s offer considered seriously,” said another banker with an exposure to Jet Airways. 

Resolution plan needs clearance from RBI, Sebi
According to SBI, any resolution plan would be subject to clearance by RBI, Sebi and the Ministry of Civil Aviation, as well as approval from the airline’s board and all of its lenders


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