THE FIGHT FOR JET AIRWAYS

The crisis at Jet Airways, India’s second largest private airline, has worsened into a face-off between Naresh Goyal, the airline’s chairman, who owns a 51 per cent stake, and Etihad Airways, which owns 24 per cent. As the lenders, led by the State Bank of India (SBI), huddle to rescue Jet, which owes them Rs 8,000 crore, Goyal and Etihad’s demands have confounded them. Etihad, the flag carrier of the United Arab Emirates, reportedly wants a complete exit of the Goyal family from Jet Airways.

Etihad CEO Tony Douglas also expressed concern about the imminent risk of Jet Airways being grounded due to delayed payments to its lessors—GE Capital Aviation Services, SMBC Aviation Capital and

Jackson Square—from whom the airline leases aircraft. “Further, the business is unable to fund continuing operations from the end of this week, without immediate and substantial additional funding,” Douglas wrote in a letter to Jet’s lenders last week. Goyal has made a counter-proposal, offering to invest Rs 700 crore in the airline to pare some of its debt, on the condition that he be allowed to retain a 25 per cent stake.

Jet, meanwhile, has said that the company is working on various costcutting measures, debt reduction and funding options, infusion of capital and monetisation of assets. It also said that the SBI, in consultation with other members of the consortium, has been working on a “comprehensive resolution plan towards a turnaround of the company.” Reports say the lenders have proposed a $900 million (around Rs 6,390 crore) resolution plan, comprising fresh equity infusion and restructuring of $450 million (around Rs 3,195 crore) of the airline’s loans. However, this will leave Goyal with a considerably reduced stake. As options run out, he may ultimately have to agree to a reduced share.

For the July-September quarter of the present fiscal, Jet reported its third quarterly loss of Rs 1,292 crore, on account of high fuel costs, an appreciated rupee and price competition.

According to a recent report by the International Air Transport Association, India will overtake the UK to become the world’s third largest air travel market by 2024, and China will replace the US as the largest aviation market. The number of domestic fliers in India crossed the 100 million mark in the first nine months of 2018, but airport infrastructure has lagged and big hubs, such as Delhi and Mumbai, can no longer add more flights. However, times have been tough for many airlines. Kingfisher Airlines was grounded in October 2012, while national carrier Air India, surviving on government funds, accumulated cumulative losses of Rs 47,145.62 crore in 2016-17.

With the government saying that Jet Airways needs to find its own way out of the present muddle, the airline will have to take a hard look at the few options it has before it.

Etihad, reportedly, wants a complete exit of Naresh Goyal and family from Jet Airways