And now, Etihad asks SBI to bail it out from Jet Airways
20 March 2019
Jet Airways’ financial problems have worsened with partner Etihad deciding to part with Jet Airways and formally asking State Bank of India to purchase its stake in the airline. Jet Air is now placed in a similar situation as that of the now defunct Kingfisher Airlines.
Abu Dhabi-based Etihad Airways, which owns about 24 per cent in Jet, has found it difficult to handle financial matters as Jet Airways became more demanding. Etihad was also reluctant to participate in discussions to resolve Jet’s financial woes with Naresh Goyal at the helm.
Etihad on Monday formally conveyed its decision to exit Jet in a meeting on Monday.
Etihad Airways has asked the State Bank of India (SBI) to buy out its stake in beleaguered Jet Airways, in a move that could deepen the crisis at the full service carrier.
Jet Airways, already hit by a financial crisis, is now being forced to curtail operations following orders to ground its mainstay Boeing 737 Max 8 aircraft and forcing passengers to shell out more for their travel.
Jet’s financial woes also fuelled the pileup of grounded planes as carriers operating on truncated fleet alter schedules, curtail flights and hike airfares during a busy season.
The grounding of planes by airlines comes at a time when the annual school holidays start in April. It is also the peak travel period in the country.
Reports said Etihad wants SBI to buy out its stake and also take over its liabilities in the form of a guarantee for Jet’s loan from HSBC Dubai. Etihad has also offered its 50.1 per cent stake in Jet Privilege to SBI.
“Etihad wants to exit Jet completely. Any decision now has to come from SBI,” a source said. Etihad CEO Tony Douglas is believed to have discussed this with SBI chairman Rajnish Kumar on Monday.
The consortium of lenders led by SBI will meet in Mumbai to discuss the latest development and decide on a future plan for Jet.
The problems associated with the grounding of the Boeing 737 max aircraft has been worsened by Jet grounding over 50 per cent of its fleet, which in turn has also led to an increase in air fares.
Government’s efforts to insulate passengers from the sector’s turbulence has not helped much. Last week, civil aviation secretary Pradeep Singh Kharola advised carriers to refrain from hiking fares. He also said, “The DGCA has said it will be monitoring all the sectors very closely…”