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Etihad injects US$35 million into Jet Airways via loyalty program
October 12th 2018
Another week, another Jet Airways finance update. Read More » The cash-strapped Indian airline this week received a US$35 million “cash pre-purchase payment” from JetPrivilege, the carrier’s loyalty programme majority-owned by Abu Dhabi’s Etihad Airways. The UAE carrier has a 24% shareholding in Jet Airways.
“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,” said an Etihad spokeswoman.
Asked for clarification, Jet Airways played down the significance of the deal and said the agreement was nothing unusual considering the airline “regularly purchases these tickets to offer its members against redemption of miles”.
This is the latest move by Jet Airways to veer away from insolvency. Last month, the airline delayed the payment of 25% of wages owed to pilots, engineers and selected senior staff.
In August, it became clear that Jet Airways’ money worries were more serious than previously thought. In its first quarter to June 30, Jet Airways reported a net loss of 13.2 billion (US$198 million), a reversal from a 53.5 million rupee profit in the year-ago period.
The Mumbai-headquartered carrier blamed a 36% increase in fuel, a low fare environment and depreciation of the Indian rupee against the US$ for its poor performance.
There was some good news on the fuel front this week when the Indian government announced a reduction of the “aviation turbine fuel tax” from 14% to 11%. New Delhi said the reduction was “necessary” and “in the interest of the public”.
Jet Airways is still seeking a capital injection of up to US$400 million from a share issuance. Its current market capitalization is US$450 million. For the 2017-2018 year to March 31, the airline announced a net loss of US$90.3 million, down from an INR15 billion net gain in the previous 12 months. It has posted losses in nine of the last eleven fiscal years.
