The Jet Airways lenders led by State Bank of India will now have a board seat at the nine-member board of the ailing airline.
This will help lenders to monitor their interests more closely as the loss-making airline is now in the process of implementing a restructuring process where lenders will get a substantial equity stake and also pump in fresh money in the form of loans. This entry of lenders on the board assumes significance as the promoter Naresh Goyal, who built the airline in the last 25 years, is possibly stepping down as the chairman.
As per the current plan of lenders, the SBI-led consortium of banks will have at least one nominee director to start with. "We can push for more," says one of the lenders in the know of details.
Currently, lenders have no representation on the board. The banks, promoters and strategic partner Etihad Airways are in the process of implementing a restructuring plan, which is facing some roadblocks. The restructuring includes fresh infusion of funds by all the three stakeholders. Jet Airways promoter Goyal's stake will go down from 51 per cent to 22 per cent. The strategic partner Etihad Airways will retain its stake at the existing 24 per cent, but will have to bring in more capital. The lenders led by SBI would be converting a part of the loan into equity to take a majority stake in the airline. There will also be fresh infusion of funds by lenders.
The Jet losses have been mounting in the last one year. In 2017-18, the Jet posted a loss of Rs 767 crore. However, in the first three quarters of 2018-19, the losses swelled to Rs 3,207 crore. The airline, which has a debt of over Rs 8,000 crore, is in urgent need of funds to meet its repayment obligation. If Jet Airways promoter and Etihad does not resolve their differences, there could be a possibility of lenders bringing in a new equity partner.