Etihad Pushes For Cheaper Deal With Jet Airways, Asks For More Board Positions

Jet Airways is most likely to get a lifeline if United Arab Emirates (UAE)-based Etihad and Jet manage to reach an agreement, and Etihad decides to increase its stake in the carrier, in which it already holds 24 per cent while Jet Airways promoter Naresh Goyal holds 51 per cent. However, Etihad is insisting on a cheaper deal this time from Jet promoters while a consortium of banks led by State Bank of India (SBI) is working on debt restructuring plans.

Sources say Jet Airways' huge debt has led to delayed salaries to its staff, including pilots and engineers. The full-service carrier, which has been grappling with financial woes for some time, faced a crisis as fuel prices shot up last year. The airline also defaulted on payments to lessors, compounding the problem. Since then, there has been some relief in oil prices and Jet Airways has been using this time to address its cash flow problems. 

Jet Airways is looking at a two-pronged approach at resolving the crisis including debt restructuring and fresh infusion of funds to meet its immediate financial needs.

Sources say Etihad will agree raise its stake in Jet Airways only if Jet Airways' lenders agree on debt restructuring, after reports that a forensic audit did not throw up any adverse findings on its accounts. Etihad has also sought top positions for its officials on Jet Airways' board if it agrees to raise its stake and infuse fresh funds.

Jet founder Mr Goyal will have to reduce his stake for the deal to go through and this is something that he has avoided so far. The Civil Aviation Ministry has said it is studying regulations on the finer points of Etihad's demands.

In a statement Jet Airways, denied reports on the resolution plan and said, “We refer to the various media reports concerning a communication alleged to have been sent by Etihad Airways PJSC to State Bank of India in relation to the resolution plan for Jet Airways (India) Limited. At the outset, we hereby categorically state that nothing mentioned in the various media reports shall be deemed to be attributed to the Company and we also vehemently deny any discussions or disclosure on our part, with any media concerning the matter.”
 
“We wish to clarify that the resolution plan is presently under active discussion amongst the stakeholders and the various options therein, being privileged and confidential, are yet to be crystallised and agreed to by the stakeholders in the best interests of the Company. The Company is committed to be in compliance with the applicable laws and will, at the appropriate time, make necessary disclosures and statements in order to ensure transparency and avoid speculations and rumours in respect of the subject matter,” the statement added.