Mumbai: The chairman of the biggest private airline was forced to step down; but the market was celebrating the event. The stock of the Jet Airways got boomed to over 12.4 percent giving it the biggest gain for the airline since January 14.
Goyal’s resignation has paved way for lenders to invoke the entire 51 percent share and start the process of rescuing the airline from the financial crisis. Jet, which has a debt of over 1 billion dollar, is said to owe about some million dollars to passengers due to flight cancellations.
The worst is gone and now the remaining hurdles are less is the sentiment on dalal street. Hence, we could witness a 12 percent rise in Jet stocks. The lenders will pump in the Rs 1500 crore required by the company to optimise the operations.
Now the SBI led consortium has control of the company. The lenders will now constitute an interim management committee to start the operations.
Read more:No sacrifice is big for me to safeguard Jet Airways : Goyal on last day as Chairman
The professionals in the aviation business could not save the company from downing; will the lenders have expertise to tap the proper talent till a new investor takes the charge of the company? will the company fly high or will it be flying low?
Hopefully an affirmative will come out of this is the dalal streets guess. The action of persuading Naresh Goyal to step down was certainly a late move. Almost 23,000 jobs are at stake in a business that owns depreciating assets.
Moreover, will the lenders re-negotiate the lease with the lessors or continue with the old agreement is another important question. The previous management of the company had not negotiated the deals properly and hence the company was shelling out more to the lessors is what some internal sources are claiming.
The lease was on the higher side and this was the main reason for the financial collapse of the company. The financial issue is not new to Jet airways. Some years back the company was in financial crisis.
Then Kingfisher too was in financial crisis. It would have been a bigger issue had Jet too opted to trim down the operations. Instead the company preferred a cost cutting formula. But the management forgot the then crisis and carried out to lavishly run the company.
Goyal’s manoeuvres to retain control of his company delayed resolution plan. Etihad Airways the second equity partner in the company had refused to come to rescue the company. They had laid down some serious conditions, like a passive role for Naresh Goyal and they also were firm on another demand to cap Goyal’s stake at 22 percent.
Goyal’s penchant for control was becoming the biggest deal breaker and even today Goyal is not far away from regaining the control of the company. The lenders have not capped his stake.
He just needs some 30 odd crores to regain the control of the board. Hence it will be too early to discount Naresh Goyal from Jet Airways board.
