Sad day for Indian aviation: SpiceJet chief on developments at Jet Airways

Dwayne Harmon
March 26, 2019

The board decisions come as the full-service airline struggles to repay its debt of almost Rs 8,000 crore to banks led by State Bank of India.

Referring to the latest developments, Singh, who is the Chairman and Managing Director of budget carrier SpiceJet, also said it was a wake-up call for the country's policymakers to address structural challenges that is making domestic airlines uncompetitive. Jet's shares rose nearly 13% following the news of Goyal's exit. In the meantime they will nominate two directors to Jet's board.

Naresh Goyal will cease to be the chairman of the company, Jet Airways said. It has also delayed payments to banks, suppliers, employees and aircraft lessors.

Last week, Jet Airways' pilots threatened to stop flying from April 1 if the cash-strapped airline did not come up with a rescue plan in place by March 31, a trade union body said.

Naresh Goyal, Chairman of Jet Airways speaks during a news conference in Mumbai, India, November 29, 2017. The airlines have promised the pilots a base city of their choice, apart from a two-month base salary as a joining bonus, they said.

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Last week, Reuters reported, citing two people in the know, that the central government had asked state-run banks to rescue the airline without pushing it into bankruptcy as Prime Minister Narendra Modi sought to avert thousands of job losses weeks before a general election.

The banks, led by State Bank of India (SBI), will convert their debt into equity and take a controlling stake in the airline for a token sum of 1 rupee ($0.0145), Jet said in a statement to the stock exchanges after its board met earlier on Monday. "I am happy with this decision".

Jet Airways did not immediately respond to a request for comment.

Meanwhile, Etihad may remain on Jet's board for now, but its 24 per cent equity stake in the airline is expected to be diluted over the course of time. Almost 23,000 of Jet's staff including pilots have been unpaid for over two months.

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