Board approval to crisis-hit Jet Airways management change today

Team of I-bankers, advisors helping bank consortium in rescue deal

The lenders to Jet Airways worked through the weekend to finalise the details of a new resolution plan to rescue the failing airline. That includes an emergency funding of at least Rs 1,500 crore. The plan prepared by the lenders’ consortium, led by the State Bank of India, will be discussed at the Jet board meeting scheduled for Monday, according to sources in the know. It is learnt that a change in the Jet management, including a new board chairman, could be executed immediately after the board approvals. 

Investment banking firm Arpwood Capital is helping the lenders’ group in the process, it is learnt. McKinsey is involved as a strategic advisor.     

“Jet will survive…. Banks will save the airline,’’ said a source close to the development on Sunday evening. 

With less than three weeks left for the Lok Sabha elections, that’s a relief for the government. Lenders have been able to work out a consensus amongst the consortium members though there were differences, he pointed out.

Resignation of current chairman Naresh Goyal, who holds 51 per cent in the airline and is believed to be in London, is among the conditions for lenders to hold a majority stake in the airline, which has a debt of over Rs 8,000 crore besides other dues and liabilities. As part of the resolution plan, lenders are to receive 114 million shares upon conversion of debt and this will give them 50 per cent stake in the airline. 

The next stage of the resolution plan is to find an investor/buyer for Jet, which is left with less than a third of its fleet due to regular grounding of planes for lessors not getting paid. While Etihad, which holds 24 per cent in Jet, has indicated it wants to exit the joint venture, a source said that no option has been closed yet. But he added that it’s unlikely that Etihad would be part of the new plan. Etihad representatives are also likely to attend the board meeting on Monday. Talks have already begun with potential investors and the processes (including that of an open auction) are being put in place. Among others, Tata Group, already with two airlines — Vistara and AirAsia — is being named again as a possible investor in Jet. ‘’Lenders see Jet Airways as a good asset and will work to find a new buyer for the airline through a transparent auction process in two months,’’ a source said.

Jet did not immediately respond to a query on Sunday.

On a wing & a prayer

• As part of the resolution plan, lenders are to receive 114 million shares upon conversion of debt

• This will give them 50% stake in the airline

• Lenders are also expected to approve Rs 1,500 crore in emergency funding, allowing the airline to pay its staff and debtors