UAE airline offered to buy more shares of Jet at a 49 percent discount.
Etihad Airways and Jet Airways on Wednesday dismissed reports by Indian media about the UAE airline’s offer to buy more shares of the troubled Indian carrier in a $35 million instant bailout deal as speculative.
An Etihad spokesperson, when asked to comment on the reported offer to pick up shares of debt-laden Jet Airways at a 49 per cent discount and to immediately release $35 million to rescue the Indian carrier, said “Etihad does not comment on rumour or speculation.”
After a television channel reported on Tuesday that Etihad had offered to pay Rs150 for each share of the Indian airline, in which Etihad already has a 24 per cent stake, Jet Airways shares fell as much as 7.5 per cent to 271.75 rupees in their biggest intraday drop since early December.
Speaking to Khaleej Times, a Jet Airways spokesman said the carrier has undertaken a series of initiatives to enhance economic performance, efficiency and productivity that will ensure the long-term health of its business given the challenging aviation industry conditions against the backdrop of a rise in the Brent fuel price, a depreciating Rupee and a difficult pricing environment.
“The company continues to work on various other cost cutting measures, debt reduction and funding options including infusion of capital, monetization of assets including the company’s stake in its loyalty program, in consultation with various key stakeholders,” he said.
Jet, which controls over a sixth of its home market, is reportedly has about $1.14 billion in net debt as at the end of September and a pile of dues to pilots, lessors and vendors.
On Wednesday, Jet Airways said in India that it is in talks with its lenders to resolve its debt problems. Representatives of the two airlines were due to meet with creditors, led by Jet’s biggest lender State Bank of India , in Mumbai to discuss a proposal that involves Etihad increasing its stake, a source familiar with the situation said.
However, India’s civil aviation secretary, R N Choubey, told reporters on the sidelines of a conference in Mumbai that control of Jet would need to remain in domestic hands.
“Under no circumstances will we allow the substantial ownership and effective control to be busted,” he said, adding that even if Etihad’s stake is raised to 49 percent, the regulator will need to be satisfied that control was local.
Reports from India cited as their source a letter from Etihad’s CEO Tony Douglas to the State Bank of India, Jet’s biggest lender, about a restructuring plan for the Indian carrier.
The letter also reportedly warned of the imminent risk of lessors grounding aircraft, the report said.
According to unconfirmed reports in Indian media, Etihad wants Jet’s founder and Chairman Naresh Goyal to step down from the board and his stake to be slashed to 22 per cent from 51 per cent. The Abu Dhabi-based carrier is also reportedly seeking an exemption from the market regulator on preference pricing and open offer guidelines to invest more for the bailout.
Jet Airways spokesman said it is optimising Gulf operations via the airline’s hubs in Mumbai and Delhi instead of point-to-point connectivity as a part of cost cutting initiatives. The airline has undertaken a comprehensive review of its network whereby it will move capacity from uneconomical routes to more profitable ones to more closely align the capacity offered with the demand characteristics of specific markets.
“Concentrating capacity over the airline’s hubs will enhance frequencies and offer greater choice to guests connecting to Domestic India, Far-East, Colombo, Dhaka, Kathmandu and our flights to Europe & Canada, while improving its asset utilization and resource productivity simultaneously,” Jet spokesman said.
“Together with Jet Airways’ first non-stop daily service between Pune and Singapore effective 1st December, the airline is enhancing frequencies between Delhi – Bangkok, Mumbai – Doha, Delhi – Doha, Mumbai – Dubai and Delhi Kathmandu during the winter schedule. Jet Airways’ guests can continue travelling to Kozhikode (Calicut), Kochi (Cochin), Mangaluru, and, Thiruvananthapuram using the airline’s seamless connectivity over Mumbai,” he said.
By Issac John