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Jet Airways’ financial problems took a turn for the worse on Tuesday with partner Etihad formally asking State Bank of India to purchase its stake in the airline and the pilots’ union threatening to strike work from April 1 if salary arrears are not cleared.
After a meeting between Etihad Airways CEO Tony Douglas and State Bank of India Chairman Rajnish Kumar, The Abu Dhabi-based airline has stated that it will not participate in the resolution plan for Jet Airways.
“Etihad wants to exit Jet completely. Any decision now has to come from SBI,” a source said. Etihad CEO Tony Douglas is believed to have discussed this with SBI chairman Rajnish Kumar on Monday.
When contacted, Etihad repeated its earlier statement that it was working with Jet. “As a minority shareholder, Etihad is working closely with Indian lenders, the company and key stakeholders to facilitate a solution for Jet AirwaysNSE -5.06 %.”
Qatar Airways May Not Invest In Jet
Etihad’s decision to pull out and the collapse of the resolution plan put forward by jet chairman Naresh Goyal, bankers and the middle-eastern airline last month means the situation has become critical for the Indian carrier.
According to the draft memorandum of understanding, Etihad was to infuse Rs 1,600-1,900 crore for a stake of 24.9%, just below the 25% threshold that triggers an open offer.
Lenders were to infuse another Rs 1,000 crore and take a 29.5% stake. About Rs 450 crore that the carrier owes to entities related to founder Naresh Goyal were to be converted into equity. Goyal, who has already infused Rs 250 crore, was to end up with a holding of 17.1% and not more than 22%.
Goyal is talking to Qatar airways, which is interested in the Indian market, for a possible investment. But the effort may be futile, people close to the discussions said. “Qatar airways would be interested in jet only with Goyal as a minority investor, a pre-condition put forward by Etihad too,” said a source in the know, who did not want to be identified.