Etihad finally caves in creditor and promoter demands to invest in Jet

• Jet Airways’ ₹85 billion resolution plan was given a shot in the arm yesterday, after Etihad agreed to pump a fresh round of capital into the struggling airline.
  
• As a result, Jet’s share price on the Bombay Stock Exchange rose 2% in early trading this morning.
  
• In order to keep Jet afloat for the time being, Etihad was being courted by Jet’s owner Naresh Goyal for a ₹7.5 billion investment. However, sources told the Press Trust of India that Etihad’s investment could be in the region of ₹16-₹19 billion.

Jet Airways’ ₹85 billion resolution plan was given a shot in the arm late on March 11th, after Etihad agreed to pump a fresh round of capital into the struggling airline. As a result, Jet’s share price on the Bombay Stock Exchange rose 2% in early trading on March 12th.

In order to keep Jet afloat for the time being, Etihad was being courted by Jet’s owner Naresh Goyal for a ₹7.5 billion investment. This is equivalent to the interim funding that Jet’s creditors are willing to extend to the airline.

However, sources told the Press Trust of India that Etihad’s investment could be in the region of ₹16 billion-₹19 billion, raising its stake by 0.9 percentage points to 24.9% and giving it two additional board seats. This, in addition, to a ₹20.5 billion loan from Punjab National Bank is aimed at helping the airline tide over while a resolution and restructuring plan is finalised.

For the past few weeks, the consortium of creditors finalising Jet’s bailout have been pushing for Etihad’s participation - not only in terms of an investment, but also in taking operational control as Jet’s owner Naresh Goyal has decided to step down.

Whatever the eventual amount, the investment from Etihad, which is pending the approval of the board of the UAE-based airline, comes with some rigid conditions.

It will reportedly be secured against 15% of the shares of Jet’s loyalty programme subsidiary, Jet Privilege Pvt. Ltd. It will also be contingent on the completion of the full round of interim financing of ₹40 billion by Jet’s creditors and promoters.


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Jet’s chairman finally agrees to step down, paving way for bank-led bailout