INSUBCONTINENT EXCLUSIVE:
The end, eventually, came quicker than many thought
After delaying the inevitable for as long as he could, Jet Airways' founder and main promoter Naresh Goyal reportedly resigned from the
board of the beleaguered airline he founded nearly two decades and a half ago
Goyal's wife Anita also stepped down along with him.
A formal announcement should be out shortly.
For quite some time it was touch-and-go
for the troubled airline facing its worst-ever crisis
It had delayed payments to most vendors including plane leasing firms
Salaries of its employees were also being delayed inordinately
All options for the founders were getting exhausted fast
Especially after Etihad's change of heart, crash-landing was just a matter of time for the beleaguered Goyals.
Beginning of the endgame:
The funding tangleThe writing on the wall had become clear a few days ago when SBI asked Goyal and three fellow director to resign in view
of the airline edging closer to the brink after more and more planes began getting grounded every week for lack of funds
SBI, the lead lender of the consortium that extended loans to Jet, also clearly signalled that it would not be picking up Etihad's 24%
stake.
SBI chief Rajnish Kumar, however, had insisted that forcing the airline out of business was a bad idea
plan required Jet's lenders to convert debt into 114 million shares
The airline had already enhanced its share capital and as a next step, was supposed issue fresh shares via a rights issue
Under the MoU, Etihad was supposed to infuse Rs 1,600-1,900 crore for a 24.9% stake, just below the 25% threshold which necessitates an open
offer.
Lenders were to pump in another Rs 1,000 crore for a 29.5% stake
The carrier's debt worth about Rs 450 crore was to be converted into equity
hardballEtihad had earlier put a big spanner in Goyal plans by refusing to play ball if the restructuring strategy for Jet was not reworked
The UAE airline said it would not infuse emergency funds of Rs 750 crore if it didn't find the resolution plan acceptable
Jet's prospects went from bad to outright bleak after Etihad dug in its heels and said it won't be part of the fundraising plan drawn up
This left Jet's lenders with practically no option to save the drowning airline.
Under the resolution plan, lenders were to give Rs 750
crore to Jet on an immediate basis, with a comparable amount supposed to be raised by Etihad
Jet's fate was sealed for all practical purposes when Etihad refused to comply with this condition
Delaying the inevitableNaresh Goyal had tried every trick in the book to keep from ceding control of the airline he founded 25 years ago
his son Nivaan be allowed to take his place at the helm.
Signs of the coming crisis were evident as early as mid-December last year when
Nikos Kardassis, widely hailed as Naresh Goyal's turnaround man, abruptly left Jet
The Greek-American aviation veteran, whom Goyal had brought in to help him turn Jet around, went on leave but never returned.
A history of
troublesMemories of Kingfisher, the biggest aviation fiasco in India's history, are still fresh
The airline that had the second largest share in the domestic travel market finally went under in 2012 after years of losses and high
debts.
Some years ago, low-cost airline SpiceJet too was about to crash-land for more or less similar reasons as Jet's
The two airlines are expected to keep on at their pricing game, which means capital infusion is the only thing that can keep Jet flying
Near-term losses are unavoidable for Jet, and only a sufficient amount of capital will help the airline deal with that blow
aviation circles will also be what path the government chooses to take
management.
In all likelihood, as things stand, the government can't probably afford to let Jet fly into the sunset with its 23,000 jobs as
a fraught election season nears
But here's the moot point: can it muster the political will to treat Jet differently than it had threated Kingfisher
All said and done,
the first chapter of the turbulent Jet Aiways saga has now come to an end
Will the new chapter be any different The fate of Jet, as they say, is truly up in the air now.
