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Jet Airways founder Naresh Goyal agrees to step down as chairman: Sources

Naresh Goyal, Chairman of Jet Airways speaks during a news conference in Mumbai. Photograph:( Reuters )

Reuters New Delhi, Delhi, India Feb 28, 2019, 11.15 PM (IST)

Jet Airways' founder Naresh Goyal has agreed to step down as chairman of the airline's board, two sources with direct knowledge of the matter told Reuters on Thursday, as the cash-strapped Indian carrier inches closer to securing a rescue deal.

Goyal, who founded the full-service carrier 25 years ago, has also agreed to reduce his 51 percent stake, one source said. The source said Goyal would continue to be a part of the company in some capacity even after stepping down as chairman.

The rising dominance of low-cost carriers like IndiGo in a price sensitive market as well as high oil prices, hefty fuel taxes and a weak rupee have left Jet strapped for cash.

Saddled with a billion dollars in debt, Jet Airways is struggling to make payments to its pilots, vendors and lessors, some of whom have forced the airline to ground over a dozen planes.

Jet did not respond to an email seeking comment but said last week its board had approved a rescue deal which will make its lenders, lead by State Bank of India (SBI), its largest shareholders.

The deal, which is subject to regulatory approvals, includes an equity infusion, debt restructuring and the sale or sale and lease back of aircraft.

Eithad, which owns a 24 per cent stake in Jet Airways, is reticent to put more money into the airline including interim funds of about 7 billion rupees ($99 million), one of the sources said.

The Abu Dhabi carrier, however, is still in discussions to raise its stake in Jet but will not shoulder any management responsibility, said a third source aware of the matter.

"Management of the airline is a hot sticking point that needs to be sorted out," said the source, indicating that Etihad's patience appeared to be wearing thin.

An Etihad spokesman declined to comment.

Story highlights

Goyal, who founded the full-service carrier 25 years ago, has also agreed to reduce his 51 percent stake, one source said. The source said Goyal would continue to be a part of the company in some capacity even after stepping down as chairman.