India’s largest lender State Bank of India (SBI) is set to swap part of its loans into a stake of at least 15 per cent in Jet Airways as lenders to the carrier plan similar conversions of some debt into equity to help keep the carrier alive, people with knowledge of the matter said.

Under a new rescue deal in the works for the full-service airline, founder Chairman Naresh Goyal’s stake will fall below 20 per cent from 51 per cent currently, the sources said, asking not to be identified. Etihad Airways PJSC, the foreign partner with a 24 per cent stake, is expected to infuse additional funds to take its holding to more than 40 per cent, they said.

Read also: Ready to infuse up to ₹700 cr in Jet Airways subject to conditions, says Naresh Goyal

An agreement that keeps the beleaguered airline flying would safeguard about 23,000 jobs. The Mumbai-based carrier, which has struggled with profitability in an increasingly competitive market, has piled on $1.1 billion in debt and fallen behind on paying loans and salaries. No final decision has been taken, sources said. Spokesmen for SBI and Jet Airways did not immediately respond to emails seeking comment.

Jet Airways has called an extraordinary general meeting on February 21 in Mumbai, to seek shareholders approval to increase its authorised share capital by issuing equity and preferred shares. The carrier is working on various options on the debt-equity mix, proportion of equity infusion, the airline said in a statement on January 16, adding the restructuring may lead to a change in the board of the company.

Also read: How a merger with Air India can help Jet Airways

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