Mumbai: Etihad Airways, which owns 24% stake in Jet Airways India Ltd, on Thursday said that it has proposed a financial restructuring and support plan for the Mumbai-headquartered airline, which included a $35 million cash pre-purchase payment to Jet Airway’s frequent flyer programme JPPL ( Jet Privilege Private Ltd), which is majority owned by Etihad Airways.
Etihad Airways, which owns 50.1% stake in Jet Airways frequent flyer programme, Jet Privilege Private Ltd, said in a statement on Thursday evening that it confirms that it has proposed a financial restructuring and support plan for Jet Airways that has been 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,” Etihad Airways said in an email statement.
When contacted, Jet Airways said that (Jet Privilege Private Ltd, where it owns 49.9% stake) has concluded a prepaid ticket purchase agreement for $ 35 million with Jet Airways, under normal course of business.
“JPPL (Jet Privilege Private Ltd) regularly purchases these tickets to offer its members against redemption of Miles hence the said transaction is no different and is done under normal course of Business between Jet Airways and JPPL,” the airline said.
Rising jet fuel prices and a weakening rupee have swelled operating costs of Indian airlines as a majority of payments are dollar-denominated.
While the domestic aviation sector faces headwinds, Jet Airways, which is essentially a full-service carrier, also faces stiff competition from budget airlines, which operate on a comparatively lower cost model.
Mint had on 28 September reported that Jet Airways has informed lenders that it will raise about ₹3,500 crore over the next six months through a stake sale in its loyalty programme and infusion of fresh funds into the company. The report added that the airline has also told lenders it will shave off costs by as much as ₹2,000 crore over the next two years.
Jet Airway’s stock closed at Rs 197.10, a piece, at the Bombay Stock Exchange (BSE) on Thursday, up 11.04% from the previous day. The benchmark Sensex closed at 35,169.16, down 2.24% from the previous day.