Jet Airways on verge of strategic partnership with Etihad

In September, I had written about the possibility of Etihad investing in Jet Airways. Turns out I was not the only one who was thinking like that, even Jet & Etihad seem to be thinking on the same lines.

As per Reuters, they have news from an insider Indian ministry of Civil Aviation that deal between Jet Airways and Etihad is almost a done deal, and will be at a substantial premium to the market price. Extracts from the news report filed:

“The talks are on. This is more or less final. It may take around a month and half,” the government source told reporters, referring to the Jet-Etihad negotiations.

“This deal is not just about investment but also technology and partnership in many other ways,” said the source, who declined to be identified.

It is also well-known that Jet Airways has been trying to raise an amount of $400 million for the past 2-3 years, but has not been able to raise the amount due to difficult market conditions, and even more tougher conditions in the Indian aviation space.

Now, as per deal-tracking website VCCircle, the deal for a 24% stake is on its way, and will be valued at the $400 million the airline is looking for. Like we know Etihad, they are going shopping all around their world with their pocket money, and have been able to buy stakes in Australia (Virgin Australia), Ireland (Air Lingus), Seychelles (Air Seychelles) and Germany (airberlin). Then, it went around some more in Europe and struck a strategic alliance with KLM/Air France, and counted in Air Berlin as well in the deal it made with them. What is striking, is the 100% premium Etihad is supposedly paying to make the deal.

Jet Airways will now be most likely added to the mix, and like we know Etihad, it will definitely not just be a financial deal but a strategic alliance. So, I can almost foresee all the flights going to Dubai now being diverted to the Abu Dhabi airport instead. Frequent flyer programs will become interesting as well, since you should be able to earn and burn across both the programs, even elite benefits should be offered on both carriers.

What I am wondering aloud is, like I was wondering the last time as well, is will this affect the plans of these guys to join the Star Alliance, especially since they are seeing positive movement on that front as per the press. Gulf carriers can really rip apart plans or memberships of alliances, like the recent Emirates – Qantas deal and the Air Berlin – Etihad deals have proved, both of which, incidentally will affect oneworld only. Also, where will the out of India hub be? Abu Dhabi, Brussels, Frankfurt/Munich?

I figure, at the end of the day, cash infusion is going to be a better problem to solve for 9W at this moment, and that is the direction they are headed to, while aligning their alliances could wait for later.

Related Posts:

Live From A Lounge is present on Facebook, Twitter & available via email, RSS.

About Ajay Awtaney

Ajay is a financial services pro, working to bring order to the chaos of the financial industry on an everyday basis! Beyond that, he dons the hat of India's favourite frequent traveller, trying to help people elevate their travel experience via tips and tricks they never knew before, or introduce them to the world of miles and points. Armed with an MBA from MDI Gurgaon and graduate degree in computer science from the University of Delhi, Ajay brings a systematic and objective approach on the table for his audience in dissecting travel and loyalty programs in India and around the world, and how to benefit from them. Ajay has been quoted in various reputed traditional and online media including The Hindustan Times, Inside Flyer, Bloomberg, DNA India, Conde Nast Traveller, The Telegraph, Mumbai Mirror, Mint, MoneyLife and The USA Today.

More articles by Ajay Awtaney »

Comments

  1. AJ, Jet has been unable to get permission from SEBI for the $400 million since Mr. Goyal’s holdings are in blatant violation of the laws of the land.

    Only his political clout has prevented Jet from being shut down.

Leave a Reply

Your email address will not be published. Required fields are marked *