Lenders to turn largest shareholders in Jet Air

Mumbai: The board of Jet Airways on Thursday approved a plan by its lenders led by the State Bank of India (SBI) to resolve a Rs 8,500-crore funding gap, making the lenders the largest shareholders in the troubled airline.

The resolution plan involves infusion of funds, monetisation of assets and restructuring of debt.

Jet has called a shareholders’ meeting on February 21 to seek approval for conversion of its debt into 114 million shares.

Following the conversion, it is estimated that the stake-holding of Etihad Airways and Jet Founder and Chairman Naresh Goyal will come down by half to 12 per cent and 25 per cent, respectively.

Under the plan lenders can appoint nominees to the board of India's biggest full-service carrier.

According to a statement issued by the airline, after its approval the plan will be presented back to the lenders, as well as to an overseeing committee of the Indian Bankers' Association, the board of shareholder Etihad Airways and Goyal.

"The BLPRP (Bank Led Provisional Resolution Plan) currently estimates a funding gap of Rs 8,500 crore (including proposed repayment of aircraft debt of '1,700 crore) to be met by appropriate mix of equity infusion, debt restructuring, sale/sale and lease back/ refinancing of aircraft, among other things," the company statement said.

The airline had run into trouble due to high fuel prices, falling rupee and intensified competition in the airline market.

In 2013, Abu Dhabi's Etihad worked out a bailout deal by picking up a 24 per cent stake for $600 million, along with three take-off and landing slots in London Heathrow and a majority share in Jet Airways’ frequent flyer programme.

On Thursday, Jet Airways also reported its fourth consecutive quarterly loss. The airline made a net loss of '588 crore for the December quarter compared with a profit of '165 crore a year earlier.

Revenue from operations stood at '6,148 crore in the December quarter against '6,086 crore posted in the same period last year.

Total expenses in the third quarter shot up to '6,786.15 crore compared to '6,042.58 crore a year ago.

Aircraft fuel expenses stood at '2,387.72 crore compared to '1,840.08 crore in the same quarter last year, while aircraft and engines lease rentals were at '730.35 crore against '583.67 crore.

Shares of Jet airways have fallen 68 per cent in the past year, making it the worst performing airline stock.