Jet Airways' bailout plan runs into rough weather as partner Etihad puts up conditions to support resolution

A bailout plan for the debt-laden Jet Airways seems to be getting tougher as its major stake holder Etihad Airways has reportedly put up certain hard conditions for supporting the resolution, said media reports.

Etihad had reportedly abstained from 21 February’s extra-ordinary general meeting (EGM) of Jet Airways.

Etihad has laid down stiff conditions for backing the resolution and in such a situation the bailout of the cash-strapped Jet Airways may be delayed, reported Business Standard. This will further cripple the Naresh Goyal-led Jet Airways, the report said.

Meanwhile, minority shareholders expressed concerns over Etihad Airways’ absence at the EGM of Jet Airways, said a report in The Hindu Business Line.

Jet Airways managed to get votes of 98 percent of shareholders at the EGM for various proposals including allowing lenders to convert debt to equity, said the report.

Jet Airways’ largest lender, State Bank of India (SBI), said media reports claiming that it was weighing taking the debt-laden carrier to National Company Law Tribunal (NCLT) to recoup loans were “speculative”, and that no such decision had been taken.

The statement from SBI comes days after Jet Airways, following months of crisis-talks to plug a Rs 8,500 crore ($1.2 billion) funding hole, agreed a draft plan to sell a majority stake to a consortium led by the SBI at 1 rupee.

On Friday,  Punjab National Bank (PNB) managing director Sunil Mehta said that a consortium of banks was considering an interim funding of Rs 500 crore for debt-laden Jet Airways but a final decision was not taken.

PNB is part of the lenders’ consortium, led by SBI, that has extended loans to the airline. The full service carrier is looking to raise funds and restructure its debt.

“Rs 500 crore that you are talking about is the interim funding but banks are looking at the long-term resolution of the issues for which the plan is already in place for discussions,” he noted.

Earlier, Jet Airways, after several attempts at finding help to save the carrier from a crippling pile of debt, in the middle of this month had approved a rescue deal which will make its lenders its largest shareholders and fix a near Rs 8,500 crore funding gap.

Jet Airways, which had debt exceeding Rs 8,000 crore ($1.12 billion) as of September-end, has been steadily losing market share to its rival and low-cost carrier IndiGo, which is owned by InterGlobe Aviation Ltd.

The airline has also seen its share price suffer as it navigated through several negotiations with its lenders and shareholders.

— With inputs from agencies