INSUBCONTINENT EXCLUSIVE:
Jet Airways has had seven CEOs in 10 years with its current chief taking over in August 2017.NEW DELHI: Jet Airways Ltd's 69-year-old
founder Naresh Goyal, who started out as an assistant in a travel agency, wove together charm, persistence and consummate dealmaking to
build the country's biggest full-service carrier
Now, his penchant for control has emerged as a major obstacle as the indebted airline tries to negotiate a rescue deal, several people who
have worked closely with him or known him over the years told Reuters on condition of anonymity
"He was a visionary in his day but those days are behind us," said a senior aircraft financier who has done deals with Goyal."This is the
moment of truth for Naresh Goyal."The rising dominance of low-cost carrier 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 and unable to pay employees and lessors on time.The 25-year-old airline,
which Goyal set up with his wife at a time when state-run Air India was the only real formidable opponent, has outstanding dues of about
$400 million.Jet, which has a mainly Boeing Co fleet, has delayed pre-delivery payments to the Seattle-based aircraft maker as well as to
Airbus SE, and is overdue on its repair and maintenance contracts, two sources aware of the matter said.Although the domestic air travel
market is the world's fastest growing, at about 20 per cent a year, it is also hobbled by cut-throat competition and chronically low fares
To stay afloat, Jet is cutting flights on some non-profitable routes and trying to raise cash by monetising assets.It still retains a
valuable strategic position as the biggest operator at Mumbai airport, where all of the good slots have been taken and a second airport is
It also has lucrative slots at major international airports and code share agreements with more than 20 airlines.Jet has survived a
near-death experience once before, in 2013, Abu Dhabi's Etihad Airways injected $600 million of capital for a 24 per cent stake in the
airline, three London Heathrow slots and a majority share in Jet's frequent flyer programme
The infusion helped Jet pare down debt and fight growing domestic competition.The airline is in talks with Etihad a second time and with
conglomerate Tata Sons for fresh funds or a stake sale, but sources have told Reuters that any rescue would require Goyal to step down, or
take a less prominent role.Goyal has rejected seeking funds from Tata if it meant him having to give up his position, two sources aware of
Talks with Etihad are continuing.Goyal did not directly respond to requests for comment but a Jet spokeswoman said the "conjectures being
implied with regards to the organisation's ways of working" were misleading."The airline management is a fully empowered team all
strategic, operational and tactical decisions are taken by the management under the advice of the company's board of directors," she
said.UNFORGIVING BUSINESS(With 124 planes, Jet now flies to places like Hong Kong, Dubai, Paris and London, besides over 45 destinations in
the country.)Will Horton, an independent aviation analyst based in Hong Kong, said it was time for Jet to evolve beyond "one leader or
family"."A change at the top runs its course down
Freedom to implement a new management plan is critical for strategic and financial partners, existing and potentially new," he said.When
Goyal launched Jet Airways in 1993, domestic air travel was at a nascent stage
He kickstarted the sector's growth and put the country on the map.With 124 planes, Jet now flies to places like Hong Kong, Dubai, Paris and
London, besides over 45 destinations in the country.Ceding control may not be easy for Goyal
He is Jet's chairman and holds a 51 per cent stake in the airline with his wife Anita still on the board."It is a very mom-and-pop kind of
operation where nothing happens without the two of them," said a former Jet employee, who describes the founder as a workaholic.Goyal is
always involved in key decisions and the airline's CEOs often have little executive power and do not survive for long, according to two
other current and former employees.Jet has had seven CEOs in 10 years with its current chief Vinay Dube taking over in August 2017."The
airline is his life and he built it from nothing, you have to give him respect for that," said one of the former employees
"But the airline business can be unforgiving."In 2012, Kingfisher Airlines, founded by businessman Vijay Mallya, went bust for want of
cash, leaving its lessors and creditors with pending dues.After Kingfisher went down, the government ratified the Cape Town convention, an
international treaty, making it easier for foreign owners to repossess aircraft when airlines default on payments
That means Jet's lessors could choose to reclaim planes in case of a default.The airline could also be dragged to court by its creditors
under the new insolvency law.LIMITED OPTIONS(Any rescue deal would require Naresh Goyal to step down, or take a less prominent role, sources
told Reuters.)Jet is committed to turning around its business and creating "a competitive cost structure that ensures a sustainable future
for the airline and its stakeholders," the spokeswoman said.She did not comment on any specific deals but said the airline continues to be
in active discussions with various investors to secure "sustainable financing".But Jet's rescue options appear somewhat limited given its
poor financial position - it posted losses in the last three quarters and its shares have fallen about 70 per cent so far this year, erasing
more than $900 million in market value.Goyal is knocking on all doors, including that of the government
Jet and Etihad executives also met lenders in the country to discuss a rescue deal.Senior Etihad adviser and former Jet CEO Cramer Ball was
in Mumbai last week, just days ahead of a meeting of the Abu Dhabi carrier's board on December 7 where it was expected to discuss its
investment in the domestic airline, two sources said
The outcome of the closed-door meeting remains unknown.Etihad, in an e-mail to Reuters, said it would not comment on speculation.However,
the Abu Dhabi carrier, is ready to put in more money only if Goyal dilutes his stake, a source aware of the matter told Reuters.Even so,
Etihad's stake will be capped at 49 per cent due to foreign ownership rules in domestic airlines and if it goes past the 25 per cent
ownership threshold, it would need to adhere to capital markets regulations and make an open offer to shareholders to buy a further 26 per
cent stake.If forced to do this, Etihad would risk breaching the foreign ownership restrictions and so it may have to seek a rare exemption
from the markets regulator from making an open offer.Talks with Tata are on the backburner for now but three people familiar with the
conglomerate's thinking said they may be found waiting in the wings if the Etihad deal falls through."There is an expectation that there
will be a rescue and Goyal will find a way - he always does - but there is no clarity on how much control he will have after a deal is
done," said one of the people who works with him.
