By Tanvi Mehta and Aditi Shah
BENGALURU/MUMBAI (Reuters) - State Bank of India (SBI) on Thursday said lenders to Jet Airways Ltd are considering a plan toward resolving the airline's debt woes, amid increasing prospects of a bailout by major shareholder Etihad Airways.
The statement elaborates on Jet comments made on Wednesday, in which the airline said a plan, involving a cash injection by stakeholders and board changes, was under discussion.
"SBI would like to state that lenders are considering a restructuring plan under the RBI framework for the resolution of stressed assets that would ensure long-term viability of the company," the state-owned bank said in a statement, referring to the Reserve Bank of India (RBI).
Jet controls over a sixth of a market experiencing an unprecedented boom in air travel. Yet high fuel taxes, a weak rupee and price competition have squeezed profitability, leaving Jet with 80.52 billion rupees ($1.13 billion) in net debt as at the end of September and defaulting on payments.
The airline owes money to banks, employees, vendors and lessors - some of which are exploring taking back aircraft after crisis talks with the cash-strapped airline failed to ease a row over late payments, sources previously told Reuters.
SBI's executive committee was scheduled to meet on Thursday to discuss the plan, news channel BTVI reported, citing unidentified sources. The restructuring of loans extended by SBI is subject to Jet finding a strategic partner, BTVI also said.
The bank, in its statement, said any resolution plan would be subject to clearance by the central bank, market regulator and the civil aviation ministry, as well as approval from the airline's board and all of its lenders.
Representatives of Jet and Etihad were due to meet creditors, led by SBI, in Mumbai on Wednesday to discuss a proposal that involved Etihad increasing its stake, a person familiar with the matter previously told Reuters. The outcome of the meeting is not known.
The latest statements from SBI and Jet came after another news channel, CNBC-TV 18, reported on Wednesday that Etihad had offered to buy Jet shares at a 49 percent discount to their trading price and immediately pump $35 million into the troubled carrier, citing a letter to SBI from the Abu Dhabi airline's Chief Executive Tony Douglas.
Etihad also wants Jet's founder and Chairman Naresh Goyal to step down from the board and reduce his stake to 22 percent from 51 percent, CNBC-TV 18 reported.
India's civil aviation secretary, R N Choubey, told reporters on the sidelines of a conference on Wednesday that ownership and control of Jet would need to remain in domestic hands.
Jet's shares were down 3.8 percent in afternoon trade, after falling 8 percent on Wednesday.
($1 = 71.3710 Indian rupees)
(Reporting by Tanvi Mehta in BENGALURU and Aditi Shah in Mumbai; Editing by Gopakumar Warrier and Christopher Cushing)
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