MIAMI — Following close on the heels of the now-grounded Jet Airways, the resignation of its CFO, Amit Agarwal’s, and just days after lenders were slow to secure funds to save India’s oldest private carrier, a similar fate has met the financially-strapped CEO, Vinay Dube.
Dube resigned due to “personal reasons” in a statement to the Bombay Stock Exchange Tuesday.
In March, the airline’s founder, Naresh Goyal, was forced to cede control of Jet Airways, which eventually forced the airline to suspend all operations on April 17 due to the crushing weight of over US$1 billion in debt and payment defaults to both banks and its aircraft lease-holders.
Jilted stakeholders left holding the $1.2 billion-dollar Jet Airways bag, including the State Bank of India bank (who lent the stricken airline money to stay afloat), as well as Jet Airways’ employees (who haven’t been paid in three months), and ticket-holding customers and several third-party private investors.
Abu Dhabi-based carrier, Etihad Airways, came out as the sole bidder in the first round of bidding on May 10 but did not come without strings attached- expressing concerns over the Indian carrier’s increasing liabilities and impending dismantlement.
“Etihad Airways confirmed its interest to re-invest in a minority stake in India’s Jet Airways, subject to conditions,” it said in a May 10 statement.
“Etihad re-emphasizes that it cannot be expected to be the sole investor, and that, amongst other requirements, additional suitable investors would need to provide the majority of Jet Airways’ required recapitalization.”
Although a once-hopeful prospect, Etihad’s bid produced a few furrowed brows amongst industry experts, expressing concern over its current $4.8 billion worth of losses over the past three years and the carrier’s efforts to secure loans somewhere in the vicinity of $600 million for future aircraft acquisitions.
Seen more as a distraction rather than beacon of economic hope in what was to be an underwhelming bidding process to save Jet Airways, business and aviation writer Ajay Awtaney explains, “in this situation, it is a distraction, both from a strategy and capital allocation perspective, for Etihad Airways to be focusing on fixing another airline, while they should be busy mending their own house to reclaim their former glory.”
Etihad currently owns 24% in Jet Airways and, under the current rule, can take its stake up to a maximum of 49%.