Jet Airways' revival hopes gains strength as Etihad, NIIF likely to infuse about Rs 4,000 cr; Naresh Goyal to lose all positions

Reviving the hopes of debt-laden Jet Airways to keep afloat, its equity partner Etihad Airways and a government-run sovereign wealth fund agency are expected to infuse about Rs 4,000 crore, said media reports. If this investment happens, then the crisis-hit airline’s founder, Naresh Goyal and his wife will quit the board of Jet Airways as well as all other executive positions. If the proposals being discussed among key shareholders and the board are accepted, Etihad and the National Investment and Infrastructure Fund (NIIF) may invest Rs 1,900 crore each and will get a deciding role in the operations of the airline, said a report in The Economic Times. [caption id=“attachment_5554021” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] This will end the role of Goyal in Jet Airways and his stake will be capped at around 22 percent while NIIF will own around 20 percent in the airline, said the report. Apart from these, Goyal and other promoters will also have to sign a non-compete pact, which does not allow them to take up any work that competes with the business of Jet Airways, according to a report in Mint. As per the draft proposal, the new board of Jet Airways will comprise two nominees from the Goyal family, other than Naresh Goyal and his wife Anita while his son Nivaan will be considered only for an executive position in the company, said the report. Meanwhile, Jet Airways on Monday defaulted on foreign loan repayment due to the liquidity crunch, amid Goyal seeking Rs 750 crore in urgent funding from Etihad citing the airline’s “very precarious” position, said a PTI report. “… the part repayment of the external commercial borrowing  (ECB) availed by the company, for working capital purposes, falling due on 11 March, 2019, has been delayed owing to temporary liquidity constraints,” the airline said in a filing to stock exchanges. Specific details about the borrowings were not disclosed. The company has engaged with the lender in relation to the same, the filing added. Jet Airways has a debt burden of more than Rs 8,000 crore and has been looking at various ways to raise funds. Jet Airways denied a media report on Monday that it had secured a Rs 2,050 crore ($293 million) loan from state-owned Punjab National Bank (PNB) to help pay overdue plane leasing fees and salaries, Reuters reported. The airline, which has had to ground planes after failing to make payments to leasing companies and is behind on paying pilots’ wages, said in a statement to the stock exchange that it has an existing credit facility of $300 million from PNB and that the bank has not provided any fresh credit. Last month, PTI had reported that Jet Airways was expected to receive fund infusion worth over Rs 3,000 crore post-debt-rejig and investments by Etihad Airways as well as NIIF while Goyal might remain the promoter with less than half of the existing majority stake of 51 percent. The government-backed NIIF, where Abu Dhabi Investment Authority is a key stakeholder, is likely to acquire little over 19 percent stake in the ailing airline, sources had said. They said that NIIF is likely to put in Rs 1,400 crore while lenders, led by the State Bank of India (SBI), are expected to convert debt into equity worth around Rs 600 crore. — With inputs from agencies