Jet Airways promoter Naresh Goyal to hold meeting with vendors and creditors, will seek to rework contracts

The promoter-chairman of cash-strapped Jet Airways Naresh Goyal will reportedly be holding a meeting with vendors and creditors to convince them to stand by the airline, a media report said.

Goyal, according to Financial Express, will hold the meeting with vendors, creditors, MRO partners, among others on Tuesday in Mumbai. The report added that the promoter will try to convince them "to take a haircut as the airline is unable to meet its payment obligations."

Lenders, however, said that short-term loans to keep Jet Airways afloat would be based on the plan proposed by the airline, Bloomberg reported. The airline reportedly trying to renegotiate contracts with its vendors as lenders.

Recently Jet Airways failed to disburse the December salary to some of its employees. Earlier it had defaulted on payment of salary to its senior management along with pilots and engineers.

The Naresh Goyal-controlled Jet airline, which is part-owned by Gulf carrier Etihad, has not been paying on time to about 15 percent of its over 16,000 employees since August last year due to a liquidity crunch.

Representational image. Reuters.

In December last year, the board of Jet Airways met and discussed ways to raise funds without taking an investor on board. During the meeting, there were discussions on how the airline could prune the costs further and make it viable in the long-term.

Goyal's penchant for the control of the airline has emerged as a major obstacle as Jet Airways tries to negotiate a rescue deal.

On 31 December, it was reported that Jet Airways was in discussions with the State Bank of India (SBI) for raising Rs 1,500 crore short-term loan to meet its working capital requirement and some payment obligations.

Significantly, the talks for availing loan are going on at a time when EY is carrying out a forensic audit of Jet Airways on the orders of the airline's largest lender for alleged irregularities.

The Naresh Goyal-controlled airline, which has posted three consecutive quarterly losses of over Rs 1,000 crore each since March, already has as much as Rs 8,052 of debt on its books as on 30 September. Rating agency Icra has already cut the rating on Jet Airways borrowing programmes.

--With inputs from agencies