Jet Airways agrees rescue deal with creditors

Struggling Indian airline Jet Airways has agreed a £165 million rescue plan with its creditors after lack of funds forced it to ground more than two thirds of its fleet, causing it to cancel hundreds of flights including its Manchester to Mumbai service.

To push the deal through, the airline’s founder and chairman Naresh Goyal and his wife Anita agreed to resign from the board, along with Kevin Knight, a director of Jet Airways’ shareholder Etihad, which had refused to provide emergency funds to the airline.

The Board described the decision by Goyal to step down as a ‘noble, large-hearted self-sacrifice’, to save the jobs of 22,000 employees.

A consortium of the airline’s Indian lenders, led by State Bank of India, will become majority shareholders and they will place two representatives on the airline’s board. Goyal will have two representatives on the Board and Etihad, which owns 24% of the Jet Airways, will have one.

As part of the deal, the lenders will provide interim funding of around £165 million, which will be used to pay lessors, vendors, creditors and employees ‘in a phased manner’, said the airline.

Jet Airways said the additional funding will allow it to re-deploy several of its 82 grounded aircraft and restore ‘many’ routes, but it has not said if it will resume its Manchester flights, which have been suspended until the end of April.

An Interim Management Committee has been set up to oversee the overall financial and operational performance of the airline under the overall supervision of the Board of Directors with the support of McKinsey & Co.

"The airline’s robust and long-term operating plan focuses on revenue enhancement and cost optimisation as the fundamental pillars of building a healthy, growing and durable airline," it said in a statement. "The plan addresses a cross-section of areas in addition to an operating plan, which takes advantage of the airline’s fleet, its resources, slots and its network."

The airline added: "Mr. Naresh Goyal, the Board of Directors and the entire management team of Jet Airways take this opportunity to duly acknowledge the contribution and unshakable faith of the entire workforce of Jet Airways, including the airline’s pilots and engineers, who have been supportive and understanding of the situation.

"Their exemplary forbearance has been humbling. The Promoter [Goyal] and all stakeholders remain fully committed to ensure deferred salaries and dues to external vendors and aircraft lessors are cleared on priority in the foreseeable future.

"Mr Goyal considers himself very fortunate to have such a dedicated team by his side and is confident that with their collective efforts, Jet Airways can be set back on track, signalling the successful return of India’s premier, full service international carrier."

Goyal added: "For me, the 22,000 employees are my own family, as dear to me as Nivaan, Namrata and my wife Neeta, and no sacrifice is too big for me to safeguard the interest of Jet Airways and the families of the 22,000 employees. For the sake of my family of 22,000 employees and their respective families I have today taken the step of stepping down from the Board of Jet Airways. I became the Chairman on 1st April, 1992 and my family is behind me and with me in this decision and I hope you will support my decision too.

"I will miss you one and all. Thank you for your brilliant dedication and loyalty down the years. I am proud of you and wish you all a great future ahead with our Jet Airways."