Jet Airways founder Goyal agrees to step down as chairman

Mumbai/New Delhi: Jet Airways' founder Naresh Goyal has made a decision to resign as chairman of the cash-strapped carrier's board, and has also agreed to bring down his stake to 20 percent from 51 percent and give away his decision-making powers, sources said. Goyal founded the full-service airline 25 years back and even after stepping down as chairman, he will be a part of the company in some capacity, said the sources.

Goyal's son, Nivaan, is expected to replace the-69-year-old on the board and represent his stake.

Even as Jet has been in talks with Etihad Airways, which owns a 24 percent stake, and Tata Sons for fresh funds or a stake sale, Goyal made the decision to step down after State Bank of India, Jet's biggest lender, urged Goyal and Etihad to resolve their stalemate over shareholding first.

Jet's financial woes

The share issue is part of a resolution plan to revive Jet, presently undergoing a cash crunch. Jet, India's biggest full-service carrier by market share, has been hit with financial troubles for around six months and owes money to banks, pilots, vendors and lessors due to rising fuel costs and intense competition.

Jet requires Rs 8,500 crore

The carrier has said it needs Rs 8,500 crore, which would be obtained by measures including equity infusion, debt restructuring and sale, sale and leaseback or refinancing of aircraft. Banks previously said the shareholders had agreed to put in Rs 4,000 crore as equity through a rights issue of shares. This proposed investment was later raised to Rs 5,000 crores. The plan is to raise Jet's authorised share capital by 11 times to Rs 2,200 crore. Jet lenders will then become the largest shareholders of the airline, as per the plan.