The road ahead for Jet Airways and Naresh Goyal - Will financial woes end now?
Jet Airways Founder and Promoter, Naresh Goyal has resigned from the board of ailing airline company, which he founded around 25 years back. Goyal has reduced his share in the company to 25.5 per cent from 51 per cent.
Jet Airways Founder and Promoter, Naresh Goyal has resigned from the board of ailing airline company, which he founded around 25 years back. Goyal has reduced his share in the company to 25.5 per cent from 51 per cent. His wife Anita has also resigned. The decision was awaited since long. According to the market experts, it could prove positive for an airline that has been suffering from a massive financial crisis. Jet Airways had also delayed payments to most of its vendors including plane leasing firms, major creditors. The salaries of its employees were also being delayed since long. The major lender, State Bank Of India (SBI) a few days earlier, asked Goyal and three other directors to resign from their respective posts as the company is in no position to fly further, with planes being grounded daily.
Kunal Saraogi, CEO, Equity Rush, told Zee Business Online, 'The decision was expected as the situation was really bad for Jet. There would be a relief rally for the company in share market, while an upside of 10 per cent is expected because of this positive decision coming out from board meeting today. However, questions like who is going to take over his chair and how SBI going to run the company are yet to be answered. The stock is volatile and is presently in F&O ban, but can see a positive jump in a short term period.''
Apart from husband and wife, one nominee of Etihad Airways PJSC, Kevin Knight has also quit from the board, Jet Airways mentioned in a notification to the BSE after its board meeting on 25th March.
The board meeting has also approved that the company will issue 11.4 crore equity shares to the lenders upon conversion of Re 1 of the outstanding debt. While the lenders will infuse up to Rs 1,500 crore via debt instruments.
''Strong accumulation in the stock prices has impacted a bottom creation around Rs 350 from Rs 220. It is a good sign for the stock as the technical structure of the stock is positive. I would suggest buying Jet at any dip from here on. Stoploss for a short term can be put at Rs 220 with a target at Rs 310. While for long term positions, stop-loss can be kept at Rs 200 with a target of Rs 350,'' said Rohit Singre, Sr. Technical Analyst, LKP Securities.
The Jet Airways board also announced the constitution of an Interim Management Committee at the instructions of the lenders to manage and monitor the daily operations and cash flow of the company.
Watch this Zee Business video to know more about Jet Airways and Naresh Goyal:
Burdened with over $1 billion of debt, Jet Airways is ailing to fly in the sky. The company has delayed payments to banks, suppliers, pilots and vendors forcing the airline company to ground over 40 planes to avoid further crises.
While shares of Jet Airways surged 15 percent on the BSE to end at Rs 260 on Monday, 25th March.
In 2013, Jet Airways survived the worst financial issue, when Abu Dhabi's Etihad Airways fueled $600 million of capital for a 24 percent stake in the airline, The capital infusion aided the airline to handle its debt and growing domestic competition.
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