Naresh Goyal, his wife Anita Goyal to deboard Jet

Mumbai: Jet Airways founder Naresh Goyal and his wife Anita Goyal will step down from the board of India’s oldest private airline, ending an era in the country’s aviation industry.

An interim management committee will be set up by the lenders to manage and monitor the daily operations and cash flow of the company, the Jet Airways filing with the exchanges said.

Kevin Knight, nominee director of Etihad Airways, which owns 24 stake in Jet Airways, would also step down from the board.

Banks, which will get 114 million new shares in the company, will provide the carrier with an immediate funding of as much as Rs 1,500 crore in debt.

According to the filing, two nominee directors of the lenders would be inducted and appropriate security would be created over the company's assets for securing the existing facilities extended by the lenders to the airline, which has a debt burden of more than Rs 8,000 crore.

As many as 11.4 crore equity shares of Jet Airways would be issued to the lenders upon conversion of debt.

Finance Minister Arun Jaitley said he was happy with the lenders' decision regarding Jet Airways as the public sector banks have kept legitimate self-interest and public-interest in mind.

"India needs more aircraft and airlines otherwise air fares will rise. Banks have kept self-interest in mind by trying to keep it as a going entity so that they can recover their dues. I am happy with this decision," he said.

Shares of the airline zoomed 12.69 per cent to close at Rs 254.50. Lenders will now own more than 50 per cent of the carrier, while Naresh Goyal, a former ticketing agent who went on to build one of India’s biggest airlines, will reduce his 50 per cent stake by half.

Goyal and Eithad will hold 25 per cent and 12 per cent stake, respectively, in the cash strapped airline. Goyal, who is widely seen as a pioneer in India’s fast-growing aviation industry, is once ranked among India’s 100 richest.

Naresh Goyal said, “”For the sake of my family of 22,000 employees and their respective families I have today taken the step of stepping down from the board of Jet Airways.”

Lenders led by government-owned State Bank of India had proposed an intricate bailout package, under which banks have a majority of the company for Re 1 while giving the ailing airline time to arrange fresh equity. Jet shareholders approved the plan last month, allowing banks to nominate their representatives to the board, but there was no progress in getting new investors.

The banking consortium will appoint merchant bankers to sell the stake in Jet, SBI Chairman Rajnish Kumar said.

Everyone, including Goyal and Etihad, will be allowed to bid, he said.

Little is known about Goyal’s childhood but he began his career in aviation as a ticketing agent for Lebanese International Airlines, according to his company’s website. In 1991, he started Jet Airways after India opened up its economy, and the airline started flying two years later. Over the years, he would expand Jet, then part owned by Gulf Air and Kuwait Air, into the country’s second-largest airline behind flag carrier Air India. Later on, budget airlines such as IndiGo and SpiceJet that began services more than a decade ago roiled the industry with discounted prices for no-frill services. Compounding Jet Airways woes were a depreciating Indian rupee and surging oil prices.

The government, as well as lessors, have already asked rivals like budget carrier SpiceJet to take over some of the grounded Jet Airways planes.

After weeks of speculations and uncertainties over the future course of Jet Airways has grounded over 80 planes due to financial woes.