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Setback to revival plan: Jet Airways CEO, CFO quit as banks struggle to find investor

Jet Airways aircraft are seen parked on the tarmac at Chattrapati Shivaji International Airport in Mumbai. (Express Photo by Pradip Das)

THE REVIVAL plan for Jet Airways received a setback with chief executive officer (CEO) Vinay Dube and deputy CEO and chief financial officer Amit Agarwal quitting the company and banks struggling to identify a suitable investor to salvage the grounded airline.

Dube, who had earlier worked with Delta and American Airlines, quit the carrier on Tuesday while Agarwal resigned Monday, the airline informed the stock exchanges. The spate of resignations continued Tuesday with Kuldeep Sharma, company secretary and compliance officer, and chief people s officer Rahul Taneja putting in the papers. Close to 17,000 employees across the country who haven t been paid salaries for the last three to four months are on the lookout for jobs with chances of the revival of the airline becoming bleak. Gaurang Shetty, a close associate of founder Naresh Goyal, had resigned as whole-time director from airline s board of directors last week.

Lenders will have to search for a new CEO and CFO now. They are already struggling to get an investor to revive the airline. It will be tough to get a buyer in the present circumstances. Banks will have to move the National Company Law Tribunal (NCLT), said banking sources.

Sources said that the latest bid from Etihad Airways disappointed lenders with the Abu Dhabi-based airline putting up stiff conditions, including a debt write-off, bringing in another investor and exemption from an open offer.

Etihad had refused to chip in with funds in March as its proposal for exemption from an open offer and other concessions did not work out. Bankers refused to comment on Etihad s latest conditions, stating that they are studying the proposal.

Etihad re-emphasises that it cannot be expected to be the sole investor, and that, amongst other requirements, additional suitable investors would need to provide the majority of Jet s required recapitalisation, Etihad had said in a statement on May 10, the last date for submission of bids.

However, lenders have still not opened the three unsolicited bids two from the UK and a third from the employees association of Jet Airways as they are seeking legal opinion. These bids did not submit the initial expression of interest but submitted the financial bid on the last day.

Banks that have an exposure of over Rs 9,000 crore in Jet Airways have already started making provisions for their debt in the airline. On April 17, Jet Airways decided to shut down its operations as the consortium of lenders refused to consider extending Rs 400 crore in emergency funding to keep the airline flying. On March 25, as part of the bailout plan worked out by lenders, Naresh Goyal and his wife Anita Goyal stepped down from the board.

Meanwhile, Jet Airways shares plunged Tuesday by over 7 per cent, its second day of decline, after the company s CEO and CFO resigned. The scrip tanked 7.42 per cent to close at Rs 129.10 on the BSE. During the day, it plunged 12.44 per cent to Rs 122.10. The shares had plummeted over 8 per cent Monday amid continued uncertainty over bidders.

Banks are offering up to 75 per cent stake in the company on a fully diluted basis.

SBI Caps, the merchant banking arm of SBI, had on behalf of the 26 lenders consortium invited expressions of interest between April 8-12, and received four preliminary bids. Lenders received four final offers, including the three unsolicited offers, on May 10.