Etihad throws $35 million life vest for Jet Airways

New Delhi [India], Oct 4 (ANI): Reliable sources in the aviation industry in Abu Dhabi have confirmed to ANI that Etihad Airways has green lighted JPPL, Jet’s Frequent Flyer Programme which is majority-owned by Etihad, to enter into an agreement that will provide Jet immediate liquidity of USD 35 million to help it meet some of its current obligations including staff salaries.
Informed sources in Abu Dhabi confirmed the multi-million dollar figure boon given by the national carrier of the United Arab Emirates (UAE) to Jet Airways which would help ease the embattled airline’s financial woes that include defaults on salaries of Jet Airways employees.
“Etihad Airways confirms it proposed a financial restructuring and support plan for Jet Airways that was approved by its majority shareholder. This plan includes a $35 million cash pre-purchase payment to Jet Airways by Jet Privilege, which is majority owned by Etihad Airways,” Etihad Airways said.
As part of this proposal, Etihad Airways has agreed to approve an agreement which allows for Jet Privilege pre-purchase discounted mileage redemption seats from Jet Airways, providing Jet with a windfall of USD 35 million.
On the occasion of Jet Airways 25th anniversary on August 27th, its Chairman Naresh Goyal wrote to employees: “The two significant proposals considered by the board of directors — infusion of capital and the monetisation of the airline’s stake in its loyalty programme — bode well for the long term financial health and sustainability of the airline.”
Etihad Airways had acquired a 50.1% stake in Jet Airways loyalty program ‘Jet Privilege’ in 2014 for USD 150 Million. Jet Privilege is Jet Airway’s loyalty program which allows Frequent Fliers to redeem miles accrued for discounted seats on Jet Airways and other code share partners.
Jet Airways has been making headlines for all the wrong reasons in the last few years. Defaulting on employee salaries, poor financial results and a recent horror story for passengers onboard a Mumbai to Jaipur flight wherein a de-pressurized cabin resulted in nose and ear bleeds. Ratings agency ICRA further downgraded short term and long term facilities for Jet on the back of poor financial results.
According to informed sources in Abu Dhabi, Etihad Airways recently proposed a holistic solution to Jet Airways and its majority shareholder, which included the immediate provision of liquidity to help Jet Airways meet its current obligations including employee salaries, as well as mid-to-long-term steps to recapitalise the business. (ANI)