India’s Jet Airways chairman resigns

NEW DELHI • Naresh Goyal (picture), a former ticketing agent who went on to build one of India’s biggest airlines, has stepped down as chairman of cash-strapped Jet Airways India Ltd after caving in to pressure from creditors.

Jet’s board approved resignation of Goyal, 69, and his wife Anita, the second-biggest full-service airline in India said in a filing yesterday.

Banks, which will get 114 million new shares in the company, will provide the carrier with an immediate funding of as much as 15 billion rupees (RM885.49 million) in debt.

The resignation marks the end of an era as Goyal, once ranked as one of India’s 100 richest people, is widely seen as a pioneer in India’s fast-growing aviation industry.

The move comes after his flagship company, partly owned by Abu Dhabi’s Etihad Airways PJSC, fell victim to the emergence of budget carriers offering base fares as low as two cents (8.14 sen).

His departure removes a potential obstacle for creditors, who are seeking to overhaul the company and salvage a carrier that’s grounded about two-thirds of its fleet. Jet is currently 24% owned by Etihad, but the shareholding pattern will change after issuance of shares. Lenders will now own more than 50% of the carrier.

Lenders led by government-owned State Bank of India (SBI), have proposed an intricate bailout package, under which banks have a majority of the company for one rupee — less than one US cent — while giving the ailing airline time to arrange fresh equity. Jet shareholders approved the plan last month, allowing banks to nominate their representatives to the board, but there’s no progress in getting new investors.

The banking consortium will appoint merchant bankers to sell the stake in Jet, Rajnish Kumar, SBI’s chairman told BloombergQuint in an interview. Everyone including Goyal and Etihad will be allowed to bid, he said. — Bloomberg