Chennai: Mere weeks passed by after State Bank of India-led lenders proposed a plan to restructure ailing private carrier Jet Airways. However, a new plan is already on the horizon that will see Jet founder-chairman, Naresh Goyal’s stake dip below 20 per cent from current 51 per cent, reports have stated.
To be finalised in the next two weeks, the new plan took place when Etihad Airways appointed turnaround specialist Alvarez & Marsal to conduct due diligence on Jet Airways.
It is reported that executives from Alvarez & Marsal are camped in Jet Airways’ offices in Mumbai and are taking stock of the airline’s operations and looking into its financial health and records.
According to reports the Abu Dhabi-based carrier plans to raise its stake in Jet Airways from the current 24 per cent but, more importantly, it wants the airline’s founder and chairman Naresh Goyal to give up control.
Etihad can go up to a maximum of 49 per cent according to foreign ownership rules for airlines, if gone the distance, it will breach the 25 per cent mark and must adhere to strict capital market rules.
“They (Alvarez & Marsal) are restructuring consultants. If they are there it means they are looking for stuff to cut,” a person familiar with the matter has said.
Currently, Jet Airways, which controls a sixth of the country’s booming aviation market, is seeking a cash injection by stakeholders and will make board changes.
High fuel taxes, weakening rupee and competition have reduced profitability, leaving the airline with net debt of $1.13 billion.
Earlier in January it defaulted on a debt payment to a consortium of banks, led by SBI, prompting ratings agency ICRA to downgrade the carrier.
Jet Airways brought on board two global consultants last year who also have people working out of the airline’s office in Mumbai. McKinsey is helping with cost-cutting efforts and Boston Consulting Group (BCG) is looking at ways to increase revenue, reports have stated.
Representatives of both airlines met with creditors, led by Jet’s biggest lender SBI, in Mumbai met last week to discuss a proposal that involves Etihad increasing its 24 per cent stake.
| No intervention |
| A senior official from the Civil Aviation Ministry has stated that the Ministry will not intervene in Jet Airways matter as discussions are on between lenders and promoters
On whether Jet Airways has sought any kind of help, including deferring payments to airports and oil companies, Civil Aviation Secretary R N Choubey has said the airline had earlier written to the Ministry but it decided not to intervene. “They had written to us earlier. Then we said the Ministry does not intervene into that because they are again commercial contracts between the airline and the service provider. It is for the airline and the service provider to discuss,” he said. |