The crisis in cash-strapped Jet Airways has worsened with closure imminent after founder Naresh Goyal announced his decision not to bid for acquiring stake. The move to pull out of the race appeared to be the result of threat of walkout by those willing to bid for the debt-riddled airline.
A cluster of three companies said to be backed by Goyal withdrew from the bidding process after Etihad Airways and TPG Capital threatened to walk out of the deal if Goyal was part of it. In the wake of the crisis, Jet management has proposed a complete suspension of operations as financial assistance was not forthcoming from lenders. Jet is just operating seven planes and paying fuel companies on a daily basis to operate flights. It was on April 12 that Goyal also joined the race to bid for the airline, which has more than Rs 8,000 crore debt. Goyal and wife Anita last month quit the board of the airline.
The carrier, currently operating less than 10 aircraft, is awaiting fresh fund infusion under a debt resolution plan. SBI Capital Markets has the mandate for Jet Airways sale on behalf of the SBI-led consortium of the domestic lenders to the debt-ridden private carrier. It has hardly four months to find a suitable buyer. Etihad, one of the partners in the airline, had set two conditions for investing in Jet - Goyal’s complete exit and the exemption from a capital markets rule that mandates companies to put an open offer of 20 per cent shares if it has acquired 25 per cent.
It owns 24 per cent of Jet and made clear that it did not propose to dilute that. The airline which last month said it would not participate in a revival plan for Jet returned to talks. This came after Goyal said he would relinquish all interest and control in the airline. He also resigned as chairman, pledged 31 per cent shares and also said he was willing to pledge more. It was in such a backdrop that the expression of interest from him at the last moment came as a surprise which found unacceptable to Etihad. With Goyal also opting out, the airliner is likely to shut down operations temporarily owing to unviability.
It remains to be seen how the bank consortium succeeds in finding a suitor. A meeting of the Jet Airways board is on to take a final call on shutting down operations. Already the Government has on hand behemoth Air India, a loss-making venture. To add to this, the PSU bank-led consortium has now Jet Airways in its hands, an option forced on it as allegedly pre-poll tactics.