The Jet Airways (NASDAQ: JBLU) founder and chairman, Naresh Goyal, has stepped down from the board of Jet Airways India Ltd. due to pressure from the creditors. Without the decision-making powers, it is reported that his shares position fell to 20% from 51%.
Jet’s board approved the resignation of him and his wife Anita. The second-biggest full-service airline in India will get 114 million new shares in the Company with immediate funding of as much as INR 15 Billion (USD 218 Million) in debt.
Goyal’s departure puts an end to an era. It removes a potential obstacle for the creditors as well. Goyal’s flagship company, of which Etihad Airways owns a 24% stake, has suffered the emergence of budget carriers offering base fares as low as 2 cents. Before the airline makes a fresh issue of shares, creditors want to resolve their stalemate over shareholding and revive the airline which is facing a cash crunch.
“The Jet Airways debt saga has entered a decisive phase,” said Rajesh Narain Gupta, Managing Partner of law firm SNG & Partners. “Banks have no other option but to pick up the major stake and find a new promoter for the debt-laden airline. However, it remains to be seen how successful banks become in managing an airline, going beyond their core competence.”