A consortium of lenders led by the State Bank of India will become the majority stakeholders in Jet Airways in return for a $1.2b billion rescue package announced on Thursday.

The deal should allow Jet Airways, India’s second-largest airline, to continue flying if approved by shareholders at an extraordinary general meeting next week.

Jet Airways defaulted on payments to the banks at the end of last year. It is reported not to have paid aircraft lessors or staff since October.

The airline was forced to cancel flights this week after several aircraft were grounded and leasing companies were reportedly poised to repossess aircraft pending the outcome of a meeting between the banks, Jet Airways founder and majority shareholder Naresh Goyal, and Etihad which owns a 24% stake in the carrier.

The extent of Goyal’s remaining stake in the airline if the deal goes through remains unclear.

Jet Airways reported a fourth consecutive quarterly loss as the deal was unveiled.

The rescue plan, converting Jet Airway’s debt into equity, will be presented to shareholders for approval at a meeting on February 21.

India’s airlines remain beset by financial problems despite the fast-growing domestic market. Air India is awaiting a government bailout following a failed privatisation attempt.

MoreJet Airways future ‘in balance’

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