This afternoon in India, Jet Airways’ Board of Directors put their agreement to receive a fresh induction of $380 million by Etihad Airways, who in turn will get 24% of the expanded equity capital of Jet Airways, thus making Jet Airways a part of the Equity alliance of Etihad Airways, where Etihad is sewing up partnerships with various airlines by picking up equity stakes in them. I first wrote about this possibility back in September and while the deal was close to being struck then, it took quite some back and forth in the few months ahead to come to a consensus.
Etihad confirmed later in the day that they were taking the 24% stake for $379 million dollars, and will also infuse $150 million into Jet Airways frequent flyer program JetPrivilege, and reciprocal earn and burn opportunities between both programs. Jet Airways already had sold their three pairs of London Heathrow slots to Etihad earlier, to receive $70 million in cash. Jet Airways was working as of last year to make a separate business entity for its frequent flyer program.
A part of the terms of the deal is to have Jet Airways make a hub in Abu Dhabi, and Jet Airways gets a preferential loan from Etihad’s lenders for $400 million, all of which helps Jet Airways retire its debt of $2 billion. There is also news that Jet could be leasing away some of its Airbus 330-200 planes to Etihad.
Also, while there is no news of Jet Airways wrapping up its current flights to the USA, the proposed increasing number of flights to Abu Dhabi will also be helped by transit to the USA with a pre-clearance, which may come into play soon. Jet has plans to start, along with Etihad, 23 new city pairs connecting into Abu Dhabi.
This deal clearly comes as a shot in the arm for the airline, where things were pretty bad past few months due to the debt situation. This also means a new business model will come into place with respect to the international flights, something I am keenly tracking.
Watch this space for more, and I am happy that my favourite Indian airline finally got a quality investor! I am finally hoping there will b be a Etihad/Jet Airways lounge at Mumbai & Delhi airports, something that has been missing for aeons since Jet Airways became an international carrier.
- Jet-Etihad come closer, EY buys 9W’s LHR slots
- Jet Airways deal with Etihad Airways
- Jet Airways on verge of strategic partnership with Etihad
- Speculation: Is Jet Airways going to get a shareholder in Etihad Airways?