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Eti­had, Jet Air­ways ‘in talks’ on res­cue deal

- Airlines · Transportation · Investing · Industries · Business · Mumbai · India · Alitalia · Air Berlin · Berlin · Abu Dhabi · Jet Airways · Etihad Airways Crystal Cargo · Naresh Goyal · TV18

Eti­had Air­ways is hold­ing talks with Jet Air­ways Ltd and its bankers on a res­cue plan for the debt-laden In­dian car­rier, two sources aware of the mat­ter told jour­nal­ists.

Ex­ec­u­tives from Eti­had and Jet have met some of the air­line’s bankers in Mum­bai in re­cent days to dis­cuss ways to ad­dress its cash flow is­sues and eval­u­ate the car­rier’s fu­ture busi­ness plan, the sources said.

Eti­had, which owns 24 per cent stake in Jet Air­ways, is also con­sid­er­ing in­vest­ing fresh funds in the air­line if it can agree on the struc­ture, one of the sources said, adding that no deal has been fi­nalised. The sources did not want to be named as the dis­cus­sions are pri­vate.

Jet, which is In­dia’s big­gest full ser­vice car­rier by mar­ket share, is in des­per­ate need of cash. The 25-year-old air­line, founded by Naresh Goyal, owes money to lessors and ven­dors, has de­layed salary pay­ments to pi­lots and se­nior ex­ec­u­tives and is cut­ting flights on non-prof­itable routes to save money.

In­dia is one of the world’s fastest-grow­ing do­mes­tic avi­a­tion mar­kets but high fuel prices, a weak ru­pee and in­tense price wars, which is dom­i­nated by no-frills air­lines, has ex­ac­er­bated Jet’s woes in re­cent months.

Eti­had has al­ready come to Jet’s res­cue once when it picked up a 24 per cent stake in the car­rier in 2013 but the sit­u­a­tion is dif­fer­ent this time. While the car­rier is in­vested in Jet, it has lost money in other air­line ven­tures such as Al­i­talia and Air Berlin and may be wary of loos­en­ing the purse strings again, said an­other source.

Also, with tighter lend­ing norms and a liq­uid­ity cri­sis in In­dia, bankers may be hes­i­tant to lend more to the strug­gling air­line.

On Tues­day news chan­nel CNBC-TV18 re­ported cit­ing sources that Jet is close to fi­nal­is­ing a deal un­der which Eti­had will in­ject fresh funds in the air­line.

Goyal, who is founder and ma­jor­ity share­holder, has as­sured the air­line’s pilot union that the fund­ing, which will likely re­sult in route re­struc­tur­ing and more flights to Abu Dhabi, could take place as early as mid-De­cem­ber, the chan­nel said.

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