SBI calls lenders' meeting with Jet Airways chairman Goyal, Etihad CEO Douglas

State Bank of India (SBI) has called an urgent meeting of lenders with Jet Airways Chairman Naresh Goyal and the domestic carrier's significant shareholder Etihad Airways' CEO Tony Douglas on Wednesday to discuss a way forward for the debt-laden airline, sources said. The meeting, to be held at SBI's office in Mumbai, assumes significance amid differences persisting between Goyal, the lenders and Etihad, which has 24 per cent stake in Jet Airways.

SBI is the lead lender of a consortium that has extended loans to Jet Airways. While there was no official word from the airline, as also from the lenders, officials aware about the development said the meeting has been called by SBI and both Goyal and Douglas would be present.

Earlier on Monday, Jet and Etihad said in a joint statement they along with key financial stakeholders are working towards finalisation of bank-led provisional resolution plan for the debt-laden domestic airline. The two carriers have also expressed confidence that once the plan is implemented, Jet Airways would "re-emerge as a viable and robust airline to reclaim its rightful place as airline of first choice for its customers".

The joint statement has been issued by Goyal and Douglas. Jet Airways, which has been in operation for over 25 years, has been grappling with financial woes and is looking to rejig debt as well as raise funds. Officials said Goyal is not agreeable to Etihad's demands that he should pledge his shares in the airline as well as in the loyalty programme, Jet Privilege, with lenders to raise funds.

Another bone of contention is that the Gulf carrier wants Goyal to be the sole promoter of Jet Airways but without board representation and management control, sources said. Besides, there are also differences between the lenders and Etihad, including on the airline's demand it should be exempted from any open offer requirement from Sebi in case its stake in Jet Airways is hiked.

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Lenders had originally proposed a rights issue of shares worth Rs 4,000 crore, in which SBI and other banks could have infused Rs 600 crore and NIIF Rs 1,400 crore for shares of the airlines. However, Etihad wants a rights issue worth Rs 5,000 crore while expecting SBI-led lenders and NIIF to bring an additional Rs 1,000 crore. Etihad wants to restrict its contribution to Rs 1,400 crore. Besides, it does not want to pledge its shares to raise funds and also does not want to be classified as a promoter in the company.

On February 14, Jet Airways board had approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Its shareholders have also approved conversion of loan into shares and other proposals during the Extraordinary General Meeting (EGM) last Thursday. On Monday, SBI had also said no decision has been taken on moving the National Company Law Tribunal (NCLT) against Jet Airways.

However, officials associated with the lenders and key shareholders have said SBI was considering various options, including eventually moving the tribunal seeking insolvency proceedings, if other attempts to recover its loans fail to yield desired results. In their joint statement, Goyal and Douglas had said rising oil prices, a depreciating rupee and market saturation, among other things, have combined to critically impact the civil aviation sector as a whole.

"Some airlines have been hit harder than others; Jet Airways, India's premier full-service airline, being one of them," they said. The statement further said Jet Airways' network load factor has risen to a high of 87 per cent through December 2018 and January 2019 while flight cancellation rate in December stood at 0.2 percent -- the lowest among Indian carriers.