Lenders to Jet Airways might be staring at a rocky path ahead of them as the bidders have asked for a haircut of 70-75 per cent on the total debt.

According to a source close to the development, potential investors including Etihad Airways, the Hinduja Group and AdiGro have asked for a steep haircut from the lenders as a pre-condition to picking up an equity stake in the company.

Jet Airways owed ₹14,000 crore to financial and operational creditors before the temporary shutdown of operations on April 17. Top executives from Etihad Airways and the Hinduja Group met officials from State Bank of India on Thursday in a bid to cobble up a deal. London-based AdiGro was also understood to be part of the discussion.

While all three players are keen to invest in Jet Airways, sources said that one of the key issues facing the consortium is who will get management control. None of the three players — Etihad, the Hinduja Group and AdiGro — is keen on taking a controlling stake in Jet Airways. But all three want significant management control and representation on the company’s board. “One of the issues is who will be in-charge of the operational decisions of the airline. Without a majority shareholder, this aspect is going to be a sticking point if all the potential investors want to pick a minority stake,” said a market expert.

Debt recovery

The big worry for the lenders though is debt recovery. If the lenders do not agree to the investors’ demand to take a haircut, the company would have to be put under the insolvency process. “Banks are in a tight situation because no one knows how much they can recover under the insolvency process. What if the lenders have to take a bigger haircut then?” asked an industry executive.

The bidders, on their part, want to start on a clean slate with the company debt wiped out from the books. According to one estimate, the investors will have to pump in ₹5,600 crore immediately to get the airline operational.

McKinsey & Co, which is advising both Jet Airways and its lead lender SBI on reviving the airline, has said the private carrier will need 60-70 aircraft post restructuring.