Naresh Goyal agrees to sell his stake to save Jet

Jet Airways promoter Naresh Goyal has agreed to sell his controlling stake in the cash-strapped airline and give up operational control, the CNBC TV18 report quoted the people as saying. The report did not say whether a specific buyer was chosen.

Goyal has, however, laid out certain conditions including retaining a minority stake of below 5% and a board seat on the firm, the report added.

Jet Airways’ financial woes have been worsened by rising crude oil prices and intense pricing competition in the domestic aviation industry.

Although Goyal has been reluctant to relinquish his controlling stake in the 25-year-old airline, he is said to have met all three prospective buyers—Tata Group, Etihad Airways PJSC and a consortium of Air France-KLM and Delta Air Lines Inc.

“After multiple conversations with prospective investors, it’s clear that investors would not want to invest in Jet if Goyal retains his control over the company- operationally and from an equity perspective,” said a source familiar with the development.

“Goyal has agreed to sell controlling stake in the company to an investor and has communicated the same to three strategic investors they are talking to at this point – Tata Group, Etihad & a consortium of Air France, KLM & Delta.”

Jet Airways, which is partially owned by Etihad Airways of Abu Dhabi, has about $1.1 billion in debt and needs $300 million of immediate cash infusion.

When Jet Airways promoters started hunting for investors to recapitalise the struggling carrier, the plan was to bring in an equity investor who can infuse fresh capital and acquire a minority stake in the airline.

Goyal, who owns 51 percent stake, was clear that he did not wanted to let go of the company that he founded and nurtured since 1992.

But with the noose tightening and cash crunch becoming more severe, it’s evident now that an investor is needed and fast.

The talks started with Goyal approaching private equity (PE) players, but most of them were interested in Jet Privilege Pvt. Ltd, its frequent flyer programme, and not in the airline.

Soon it became evident to the promoters that a 10-15 percent fresh infusion of capital would not lift the fate of the airline. That’s when Goyal and the top Jet management began to reach out to strategic investors like the Tata group and Delta.

Earlier this month, Tata Sons Ltd said it was in preliminary talks with debt-laden Jet, but has not made a proposal to acquire a stake.

“Goyal has told investors that he wants what’s best for the company and that’s why he is willing to let go of control. But he believes him staying on as a minority investor will ensure better transition. Add to that he has clearly told investors that the capital requirement is $1 billion to stir a turnaround for Jet Airways,” one of the sources said.