Jet Airways
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The decline of the airline
2012-19
From: Mayur Shetty, Jet normalcy in 10 days, sale in 2 months, says SBI chief, March 26, 2019: The Times of India
Goyal Family Will Do Whatever New Investors Want: Kumar
State Bank of India (SBI) chairman Rajnish Kumar has said that the new management committee appointed by banks will aim to restore Jet Airways to normalcy in 10 days.
The airline’s outgoing chairman Naresh Goyal’s place is likely to be taken by a former SBI chief — Janki Ballabh and A K Purwar have been tapped for the position. Jet’s day-to-day operations will be looked after by an interim management committee. The panel would be supervised by the board of directors, which will include two lender nominees, with the support of McKinsey & Co.
Speaking to TOI, Kumar said that the Rs 1,500-crore secured emergency funding provided by lenders would help take care of aircraft leases, demands from pressing creditors, along with pilot and staff salaries for two months. According to Kumar, the funds could be used to get grounded aircraft back in the air and cancellations should start coming down.
Lenders will also make efforts to get the grounded planes in the air as quickly as possible since Jet has the rights to many profitable routes. “Banks will hold 50.1% in the airline, which will be sold by June 2019. Goyal’s 25.5% stake will not come in the way as he has signed binding agreements and PNB has a pledge on some shares. They (Goyal family) will do whatever the new investors want,” said Kumar.
The equity conversion does not reduce any debt liability for the airline as the shares have been issued against debt of Re 1. Lenders will sell the airline to any investor who offers to pay the most for the equity and service the largest portion of the debt.
Kumar said that banks did not want to initiate insolvency proceedings against the private airline as this would result in aeroplanes being grounded. “You cannot have a resolution in the NCLT for an airline. This would mean that airline would go into liquidation,” said Kumar.
Naresh Goyal: rise and fall
1974-2019
Saurabh Sinha, March 26, 2019: The Times of India
From: Saurabh Sinha, March 26, 2019: The Times of India
Naresh Goyal’s rags-to-riches story started when he came to Delhi in 1967 as a penniless 18-year-old, after his family in Patiala faced such hard times that even two meals a day were often a struggle. From there, he learned the ways of the world and reached a position where government policies on aviation were seen to be tailored according to his requirement.
Now, another twist in fate has taken him out of Jet 28 years after launching the airline, and whether he or his family can make a comeback remains to be seen.
In 1967, Goyal joined a travel agency run by his mother’s uncle in Connaught Place where he earned about Rs 300 a month.
Later, he made friends in the travel industry — mainly in foreign airlines like those of Jordan, Gulf and Southeast Asia — and quickly learned all aspects of the trade, from ticketing to aircraft leasing. In 1973, he set up his own agency, which he called Jet Air. When he used to go to airline offices to collect paper tickets, people there would make fun of him for naming a travel agency as an airline. Goyal would tell them that one day he will set up his own airline.
That dream came true in 1991, when he started Jet Airways as an air taxi as India did not allow private airlines as scheduled carriers (with timetable of flights). A year later, Jet had its first flight starting with a fleet of four planes.
Goyal’s aviation career has not been without its share of controversies like the source of Jet’s funding in initial days. “Love him or hate him, you just can’t ignore Goyal who gave India its first decent airline in the form of Jet when the only option to fly within India was the state-owned Indian Airlines. J R D Tata-founded Air India was the finest Indian airline ever. But once the government took over AI, decades of sarkari rule and mismanagement have left the Maharaja as a beggar now,” said a senior airline official.
Buying Air Sahara for Rs 1,450 crore in 2007, to ensure Jet Airways remains the only private Indian airline to fly abroad, was seen as a mistake made by Goyal. His airline never really recovered from that financial burden. “Not trusting professionals to run the airline and doing backseat driving was another big flaw,” said a person in the know.
2023: HC quashes money laundering case
Swati Deshpande, February 24, 2023: The Times of India
From: Swati Deshpande, February 24, 2023: The Times of India
Mumbai : In a win for founder chairman of Jet Airways Naresh Goyal and his wife Anita Goyal, Bombay high court on Thursday quashed a money laundering case filed by Enforcement Directorate (ED) against them and all pending proceedings relating to it.
In January, the HC bench of Justices Revati Mohite Dere and Prithviraj Chavan had restrained the ED from taking coercive steps against the Goyals while hearing their plea to quash the Enforcement Case Information Report (ECIR) dated February 20, 2020. It said the probe and proceedings were illegal and contrary to law. After hearing a rejoinder to ED’s arguments, Justice Dere and Chavan held in Goyal’s favour and quashed proceedings underthe Prevention of Money Laundering Act (PMLA). The reasoned order will follow.
The Goyals’ case was that the ECIR has no basis since there is no prior offence against them as required after the MRA Marg police station in Mumbai closed an alleged cheating case filed by a travel agent against them.
For Naresh Goyal, senior counsel Ravi Kadam and Karan Kadam and for the wife, senior counsel Aabad Ponda, cited Supreme Court Judgments including Vijay Chaudhary versus Union of India of 2022 and ED vs Obulapuram Mining Company of 2017 to submit that proceedings under PMLA are not sustainable once the predicate—underlying offence—has been quashed or disposed of in favour of the accused.
The Goyals had petitioned the HC late last year to quash the ECIR.
