Naresh Goyal Withdraws From Bidding For Jet Airways Following Etihad, TPG’s Threat To Walk Out
Three companies have asked Jet Airways founder Naresh Goyal to represent who has recently withdrawn from the bidding process for the ailing airline after Etihad Airways and TPG Capital threatened to walk out of the deal if Goyal was part of it.
Meanwhile, Jet’s management has proposed a complete suspension of operations to its board in an ongoing meeting as there is no financial assistance forthcoming from the airline’s lenders. Jet is just operating seven planes and paying fuel companies on a daily basis to operate flights.
Jetair, Goyal’s general sales agency that had birthed Jet Airways, backed by a Delaware based firm named Future Trend Capital and a London-based entity called Adi Partners had submitted their expression of interest (EOI) at 6:08 pm on Friday, eight minutes post the deadline for submissions.
They were told there wasn’t enough time to do due diligence.
SBI Caps will select the qualified bidders today. Etihad, TPG and Indigo Capital are among the entities that have submitted EoIs. State-run National Infrastructure and Investment Fund is expected to bid directly.
A Jetair top executive didn’t reply to an emailed query. TPG declined to comment and an Etihad spokesperson said the airline wouldn’t comment on “rumours and speculation”.
Etihad’s two key conditions to invest in Jet were Goyal’s complete exit and the exemption from a capital markets rule that mandates companies to put an open offer of 20% shares if it has acquired 25% in a company. Etihad owns 24% of Jet and has specified it wants to keep its shareholding at that level since there will be no exemption from that open offer rule. The airline which had last month said it won’t participate in a revival plan for Jet returned to talks after Goyal in a letter said he would relinquish all interest and control in the airline. He also resigned as chairman and board member, pledged 31.2% shares in Jet and agreed to pledge more. An EoI from him hence may have come as an unpleasant surprise for Etihad.
Jet is now operating just six 70-seater ATR turboprops and a single Boeing 737 plane.
“Jet doesn’t want to cheat its customers into thinking it is still operating. The operations are a joke now,” said a person close to the development.
Jet needs an urgent cash infusion to survive. Its CEO Vinay Dube appealed to banks during the weekend for additional loans of Rs 1,000 crore. The banks are sharply divided on further debt assistance to Jet. They instead put across fresh conditions including more pledged shares of Goyal and Jet’s owned planes as collateral for additional loans.
According to latest estimates, Jet owes over Rs 3,500 crore to its lessors and vendors, and Rs 3,500 crore to passengers for cancelled tickets. It has a net debt of Rs 8,500 crore.