Jet Airways founder Naresh Goyal may step down as chairman today

Jet Airways chairman Goyal steps aside as carrier battles insolvency

Jet Airways founder and chairman Naresh Goyal on Monday stepped down from the board of the struggling airline.

According to Reserve Bank of India (RBI) regulations, lenders must resolve cases pertaining to defaulting companies such as Jet Airways within 180 days of their first default.

In a stock market filing which also announced the resignation, the company said that banks would lend around $210m to keep it afloat until it starts to sell shares to new investors.

Last week, Reuters reported, citing two people in the know, that the central government had asked state-run banks to rescue the airline without pushing it into bankruptcy as Prime Minister Narendra Modi sought to avert thousands of job losses weeks before a general election.

A bidding process will be initiated for new investors, which is expected to be completed in the June quarter.

Reports of Goyal's departure led to a rally in Jet's shares, which ended the day 12.4 per cent higher.

He had headed the national carrier from August 2017 to September 2017 before being moved to the Railway Board as the chairman, from where he retired in December 2018.

The next steps, which include the amount of equity capital being infused and the selection of the new board, are more critical, said CAPA India CEO Kapil Kaul. That means the airline still needs to service all of its existing loans. Almost 23,000 of Jet's staff including pilots have been unpaid for over two months.

Jet has survived collapse once before when it got close to running out of cash in 2013.

At present, Jet Airways is operating with just 41 planes out of its fleet of 119 planes after failing to repay rentals.

Currently, Abu Dhabi's Etihad Airways is Jet's single-largest shareholder with a 24% stake.

He also said that it was a wake-up call for Indian policy makers.

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