India’s oldest private airline, Jet Airways, is on the brink of a collapse, and there is a bitter battle for control underway between the two partners that own the company that has already defaulted on its debt.
Steve Forte, the man who led Jet Airways for a couple of years until 2002, has a point to make about what is unfolding at the airline. “If Mr. Goyal's offer is accepted by the banks then nothing will change and the downward spiraling of Jet Airways will continue. The airline will burn through the new cash infusion just like it did with the initial infusion from Etihad and any other loans it received,” he told the Economic Times (ET).
Naresh Goyal has offered to invest up to ?700 crore in the cash-strapped airline and sought to retain at least a 25% stake in the company. “Given Jet's outstanding debt (over ?8,000 crore),?700 crore from Mr. Goyal is a drop in the bucket,” according to Forte.
In 2013, Etihad invested more than ?2,000 crore for a 24% stake in Jet at a considerable premium to its market value, arranged soft loans for the Indian airline, and paid its bills, ET reported. Naresh Goyal, the founding Chairman, remained at the helm and five years hence, the airline
Not surprisingly, Etihad is bargaining hard this time. Reports suggest the Abu Dhabi-based partner has only offered to increase its stake in the cash-strapped airline by buying shares at only ?150 a share- a 46% discount to Jet’s current share price - and demanded the complete exit of owner Naresh Goyal and his family as well as the right to appoint a CEO.
21/01/19 Sriram Iyer/Business Insider
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Steve Forte, the man who led Jet Airways for a couple of years until 2002, has a point to make about what is unfolding at the airline. “If Mr. Goyal's offer is accepted by the banks then nothing will change and the downward spiraling of Jet Airways will continue. The airline will burn through the new cash infusion just like it did with the initial infusion from Etihad and any other loans it received,” he told the Economic Times (ET).
Naresh Goyal has offered to invest up to ?700 crore in the cash-strapped airline and sought to retain at least a 25% stake in the company. “Given Jet's outstanding debt (over ?8,000 crore),?700 crore from Mr. Goyal is a drop in the bucket,” according to Forte.
In 2013, Etihad invested more than ?2,000 crore for a 24% stake in Jet at a considerable premium to its market value, arranged soft loans for the Indian airline, and paid its bills, ET reported. Naresh Goyal, the founding Chairman, remained at the helm and five years hence, the airline
Not surprisingly, Etihad is bargaining hard this time. Reports suggest the Abu Dhabi-based partner has only offered to increase its stake in the cash-strapped airline by buying shares at only ?150 a share- a 46% discount to Jet’s current share price - and demanded the complete exit of owner Naresh Goyal and his family as well as the right to appoint a CEO.
21/01/19 Sriram Iyer/Business Insider
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