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March 26, 2019

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Jet boss quits as airline seeks rescue

India’s troubled Jet Airways said yesterday that founder Naresh Goyal has stepped down as chairman and left the company board as part of a rescue plan.

Jet, which has debts of more than US$1 billion, said in a statement that its creditors would inject up to US$218 million of “immediate funding support” into the airline.

Its shares soared 13 percent in Mumbai.

Indian media reports said that Goyal’s stake in Jet will fall to half the current 51 percent. The statement said it would also issue 11.4 million new shares.

The Mumbai-based carrier, which until turbulence recently was India’s second-biggest airline, has been forced to ground three-quarters of its 119-aircraft fleet.

This is because it was unable to pay aircraft lessors. Its pilots have also complained of delays in receiving their salaries, while the firm also defaulted on loan payments.

Thousands of customers have been stranded in recent weeks after hundreds of flights were canceled, in some cases with little or no notice.

Jet, founded by Goyal in 1993, employs more than 20,000 people.

A collapse would deal a blow to Prime Minister Narendra Modi’s pragmatic pro-business reputation ahead of elections starting on April 11.

India’s air passenger numbers have jumped six-fold in a decade as its middle class took advantage of better connectivity and cheaper flights. Its aviation sector is projected to be the world’s third-largest by 2025.

But like other carriers Jet has been hit by fluctuating global crude prices, a weak rupee and fierce competition from budget rivals.

Alarm bells first rang in August when it failed to report its quarterly earnings or pay staff on time, later reporting a US$85 million loss.


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