Jet Airways in creditor talks over possible Etihad bailout
India's carrier meets lenders to resolve debt problems as Dubai airline proposes increasing stake
16 January 2019 - 17:50
byAditi Shah
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Mumbai — India’s Jet Airways says it is in talks with its lenders to resolve its debt problems, amid increasing prospects of a bailout by major shareholder Etihad Airways.
Jet, which has been hit by intense competition, a depreciating rupee and high oil prices, said it was now looking at a cash injection by stakeholders and board changes.
It closed more than 8% lower.
Representatives of the two airlines were due to meet 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%, the regulator will need to be satisfied that control was local.
CNBC-TV 18 reported that Etihad had offered to buy Jet shares at a 49% discount and immediately release $35m to bail out the troubled carrier, citing a letter to SBI from the Abu Dhabi airline’s CEO Tony Douglas.
Jet will not be able to fund its operations beyond the next week, the CNBC-TV 18 report cited Douglas as saying.
Etihad wants Jet’s founder and chairman, 69-year-old Naresh Goyal, to step down from the board and his stake to be slashed to 22% from 51%, CNBC-TV 18 reported.
Under Indian capital markets rules, Etihad would be required to make an open offer to shareholders for a majority of the shares once its stake goes past 25%, something the Abu Dhabi airline is seeking an exemption from, CNBC-TV 18 said.
Choubey said that the ministry had not received a request from Jet and Etihad for such an exemption.
Jet CEO Vinay Dube declined to take comment at the aviation conference in Mumbai, while an Etihad spokesman also declined to comment.
A source close to Jet said it will not take delivery of any more Boeing 737 MAX planes until a resolution plan is agreed.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Jet Airways in creditor talks over possible Etihad bailout
India's carrier meets lenders to resolve debt problems as Dubai airline proposes increasing stake
Mumbai — India’s Jet Airways says it is in talks with its lenders to resolve its debt problems, amid increasing prospects of a bailout by major shareholder Etihad Airways.
Jet, which has been hit by intense competition, a depreciating rupee and high oil prices, said it was now looking at a cash injection by stakeholders and board changes.
It closed more than 8% lower.
Representatives of the two airlines were due to meet 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%, the regulator will need to be satisfied that control was local.
CNBC-TV 18 reported that Etihad had offered to buy Jet shares at a 49% discount and immediately release $35m to bail out the troubled carrier, citing a letter to SBI from the Abu Dhabi airline’s CEO Tony Douglas.
Jet will not be able to fund its operations beyond the next week, the CNBC-TV 18 report cited Douglas as saying.
Etihad wants Jet’s founder and chairman, 69-year-old Naresh Goyal, to step down from the board and his stake to be slashed to 22% from 51%, CNBC-TV 18 reported.
Under Indian capital markets rules, Etihad would be required to make an open offer to shareholders for a majority of the shares once its stake goes past 25%, something the Abu Dhabi airline is seeking an exemption from, CNBC-TV 18 said.
Choubey said that the ministry had not received a request from Jet and Etihad for such an exemption.
Jet CEO Vinay Dube declined to take comment at the aviation conference in Mumbai, while an Etihad spokesman also declined to comment.
A source close to Jet said it will not take delivery of any more Boeing 737 MAX planes until a resolution plan is agreed.
Reuters
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