Mumbai: Talks among Jet Airways, its lenders and partner Etihad Airways over a possible rescue are stuck over several stipulations by the Gulf carrier for making any further investment, particularly that it won’t pledge its shares as collateral against loans to the Indian carrier, said two people aware of the matter.
Etihad currently owns 24% of Jet, which has asked the Abu Dhabi carrier to put in more money by way of additional equity. Banks have refused any liquidity assistance for Jet until it gets equity funding from existing shareholders.
Other Etihad conditions include slashing founder-chairman Naresh Goyal’s shareholding to around 22% from 51% and stripping him of decision-making powers. Jet’s Indian lenders will extend additional debt of twice the amount that Etihad invests as equity, sources said.
It’s not clear if HSBC Dubai and Mashreq, overseas lenders to Jet, will provide further credit and join any plan to revive Jet. The two currently enjoy guarantees from Etihad for some of their exposure.
Etihad’s conditions will likely delay a bailout. India’s second-biggest airline by market share is facing the worst financial crisis in its 25-year existence, strapped for cash, laden with losses and debt.
Jet defaulted on loan repayments in December, delayed employee salaries throughout last year and failed to pay aircraft lessors in time.
14/01/19 Anirban Chowdhury/Sugata Ghosh/Economic Times