Jet Airways gets US300 million Etihad loan
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
It has been reported that Jet Airways has received a US$300 million soft loan from Middle Eastern carrier Etihad to help the Indian airline pay its debts.
The Economic Times has reported that the loan is being given at a minimal 3% interest rate, with a company official adding: “We’ll save about US$30 million annually on interest alone.”
The current interest rate sits at about 14%.
The loan comes after Etihad bought 27.2 million Jet Airways shares last month, purchasing a 24% share in the firm. The US$600million deal came with Jet’s Heathrow slots and its frequent flier programme.
Etihad has also been allocated three seats on the Jet Airways board.
The US$300 million loan will be used to replace existing loans that are in place to pay off Jet’s estimated US$2.1 billion debts.
Travel Daily reported on the 24% purchase when it happened, getting the following quotes from the chiefs of both airlines:
“The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world,” said James Hogan, president and CEO of Etihad.
Naresh Goyal, chairman of Jet Airways said the deal will help the carrier return to profitability.
“I am extremely happy to be in a partnership with an airline that shares our customer-centric operational philosophy and ethos. I have no doubt that this partnership with Etihad Airways is a win-win situation for all our stakeholders, especially our guests, who will now have access to a much expanded global network,” he said.
“This transaction further strengthens the balance sheet of Jet Airways and, more importantly, underpins future revenue streams, which will accelerate our return to sustainable profitability and liquidity,” he added.