There are 23,000 jobs at stake, dependent on a tricky manoeuvre to give the debt-stricken carrier time to find fresh equity.
A majority stake in the debt-stricken, full-service, privately owned Indian carrier Jet Airways is going for one rupee, the equivalent of just over 1 US cent, the news agency Bloomberg writes.
The move is part of a bailout plan by its state-owned lenders to take the carrier off their hands and give it time to find fresh private equity.
The deal is reported to be on track to be voted through on February 21, at a sensitive time for India with political elections a few weeks away – especially as there are 23,000 jobs at stake at the airline.
Jet Airways is one of India’s top three airlines, founded by ticketing agent-turned-entrepreneur Naresh Goyal in the early 1990s.
Now 24% owned by Etihad Airways, it has a 13.9% market share in India, which is one of the fastest-growing aviation markets in the world. Jet also flies to international destinations such as London Heathrow and Amsterdam Schiphol and, more recently, to Manchester.
Budget carriers flooding the market over the last 15 years have been biting into the full-service Jet Airways’ business, and it has also has to battle issues such as provincial taxes on jet fuel.
Jet Airways has lost money in all but two of the last 11 years and carries 72.99 billion rupees ($1 billion) of net debt.
Bloomberg calculations show it had about 3.55 billion rupees of cash at the end of last year, but it recently defaulted on loans and has delayed payments to both staff and lessors.
A group of lenders led by State Bank of India has now made a proposal to take a 50.1% stake for 1 rupee, at the same time issuing 114 million new shares. The plan needs to be approved by all lenders, a banking sector group, Etihad and by Goyal himself.