Jet Airways' revival plan stalled by promoter Naresh Goyal's demand to exclude perpetuity clause

Jet Airways promoter Naresh Goyal's demand for exclusion of the perpetuity clause has reportedly stalled the airline's revival plan, a media report said.

According to The Economic Times, Abu Dhabi-based Etihad Airways hasn’t approved the funding to Jet Airways because of Goyal’s insistence on waiver of the clause. “Etihad’s first condition was limiting Goyal’s stake to 22 percent or below and was agreed upon in the memorandum of understanding (MoU) but a waiver sought later has led to Etihad pulling back on funding,” a source aware of the development was quoted as saying by the newspaper.

On Tuesday, at Etihad 's board meeting several members reportedly expressed reservations about the terms proposed by the lenders, Mint said.

Jet Airways has been looking at various ways to raise funds amid acute liquidity crunch that has forced it to ground aircraft, cancel flights in large numbers, shut down stations and delay salary payments to its pilots and engineers along with other senior staff.

On 8 March, Jet Airways chairman Naresh Goyal wrote to Etihad Airways Group CEO Tony Douglas seeking urgent funding of Rs 750 crore.

Jet Airways revival plan stalled by promoter Naresh Goyals demand to exclude perpetuity clause

Representational image. Reuters

In the letter, Goyal also said, "Jet Airways is in a very precarious position, with more than 50 aircraft grounded and increasing arrears of vendors and salaries which makes the need for interim funding all the more imperative."

State-run Punjab National Bank (PNB) on Wednesday said any decision to provide emergency funds to cash-strapped Jet would be taken collectively by the lenders and not on a standalone basis.

The assertion came in the backdrop of media reports that PNB had approved Rs 2,050 crore of emergency funding to Jet Airways, for which lenders were considering a resolution plan under Project Sashakt.

In a filing to exchanges, Jet Airways had earlier clarified it has not received any fresh loan from PNB.

"No, we are going (on decision to lend further to Jet Airways) collectively. The resolution will come with the participation of the stakeholders and we are working on it," the bank's managing director and CEO, Sunil Mehta, told reporters when asked whether the lender was considering fresh funds to the loss-making Carrier on a standalone basis.

On Monday, Jet Airways defaulted on foreign loan repayment due to the liquidity crunch. "... the part repayment of the external commercial borrowing 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.

With PTI inputs

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Updated Date: Mar 15, 2019 15:03:41 IST

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