Etihad to infuse Rs 1,800 cr in Jet Airways via debt

Abu Dhabi-based Etihad Airways may infuse an additional $300 million (Rs 1,800 crore) through debt or preference shares in Jet Airways to boost the carrier's financials.

The Jet board on Friday approved raising of up to $300 million long-term finance, in the form of redeemable preference shares or non-convertible debentures or a loan from a "shareholder".

The airline notification to an exchange does not name the shareholder. It said the fund-raising would be subject to regulatory and corporate approvals.

Jet did not respond to an e-mail. Etihad, in an e-mail, said: "We will not be providing any comment."  

Last week, in a speech at the World Economic Forum in New Delhi, Chief Executive James Hogan had said the airline was no longer jittery about its investment in Jet and expected it to prosper under the new central government.

Etihad picked up 24 per cent stake in the Naresh Goyal-owned Jet last April, investing $379 million (Rs 2,057 crore).  Goyal controls 51 per cent in the airline.

Sources said redeemable preference shares were different from equity shares. The issue of such shares would not dilute the promoter shareholding in the airline. Both the airlines are looking at regulatory approvals, needed to complete fresh fund-raising transaction, they added.

Etihad had also purchased 50.5 per cent in Jet’s frequent-flyer programme for $150 million.

It acquired three slots at the Heathrow Airport (London) for $70 million.

Etihad had also helped Jet refinance Rs 1,800 crore (Rs 18 billion) of its high-cost debt.

Jet has reduced debt from Rs 10,500 crore (Rs 105 billion) to Rs 9,800 crore (Rs 98 billion) by end-July.

The annual interest is Rs 1,000 crore (Rs 10 billion).

Jet cut its consolidated loss by 95 per cent to Rs 43 crore (rs 430 million) in the July-September quarter of the current financial year from Rs 999 crore (Rs 9.99 billion) a year ago.

This was due to exceptional and other income from the sale of its loyalty programme.

It posted an operating loss of Rs 266 crore on a stand-alone basis.

Subsidiary JetLite continues to lose money.

It posted Rs 112-crore (Rs 1.12 billion) consolidated loss but made a profit of Rs 69 crore (Rs 690 million) on a stand-alone basis.

The airline is aiming to achieve profit by 2017 through a mix of  debt restructuring, sale of wide-body planes, improvements in products and international business expansion.