The board of Jet Airways Ltd has approved a plan by its lenders to resolve a near 85 billion rupee ($1.19 billion) funding gap, which will make them the largest shareholders of India’s biggest full-service carrier, Jet said on Thursday.
Jet, saddled with over $1 billion in debt, had a rough 2018 as competition intensified in the Indian airline market, the rupee depreciated and high oil prices squeezed margins.
The rescue deal by Jet’s lenders, led by State Bank of India, includes funding through a mix of equity infusion, debt restructuring and sale or leaseback of aircraft.
Jet will seek approval from its shareholders at a meeting on Feb. 21 for conversion of its debt into 114 million shares. It currently has 113.6 million shares on issue.
The plan gives lenders the ability to appoint nominees to the airline’s board.
Jet said that after its approval the plan will be presented back to the lenders, as well as to an overseeing committee of the Indian Bankers’ Association, the board of shareholder Etihad Airways and Jet’s founder and chairman Naresh Goyal.
Abu Dhabi’s Etihad, which owns 24 percent of Jet, bailed out the Indian airline in 2013, paying $600 million for a 24 percent stake in Jet, three take-off and landing slots in London Heathrow and a majority share in Jet’s frequent flyer programme.