Jet Airways stopped flying on April 17, following a severe fund crisis. (Photographer: Dhiraj Singh/Bloomberg)

Etihad Wants To Maintain Jet Airways Stake, Offers No Turnaround Plan

Etihad Airways PJSC has offered to maintain its 24 percent stake in Jet Airways (India) Ltd., instead of reviving the beleaguered airline, according to two people in the know.

In its bid that the Abu Dhabi-based airline submitted on Friday, Etihad has said that it would infuse further equity in Jet Airways to the extent that its stake is maintained at the current level, once a majority buyer comes in, the first person cited earlier told BloombergQuint, requesting anonymity.

The responsibility of finding this majority buyer remains with Jet Airways’ lenders and SBI Capital, which is conducting the stake sale process. While the plan suggests the need for a professional management and quality domestic investor for Jet Airways, it doesn’t say anything about the turnaround plan.

The offer made by Etihad is thus non-binding and conditional in nature, which the consortium of banks to Jet Airways is unlikely to accept.

Jet Airways stopped flying on April 17, following a severe fund crisis, which led the airline to not honouring payments to employees, vendors and banks. With Etihad also firmly sitting itself on the sidelines, lenders to Jet Airways are expected to meet this week and decide on the next steps.

Etihad’s offer needs to be looked at in the context that the three bidders shortlisted by lenders—TPG Capital, Indigo Partners and National Infrastructure Investment Fund—didn’t submit their bids on Friday.

The lenders also have three unsolicited bids from U.K.-based entrepreneur Jason Unsworth, UK-based investment firm Adi Group and Jet Airways employees’ union, which weren’t shortlisted by the lending consortium. Lenders are yet to make their mind on how to proceed with these bids. State Bank of India Chairman Rajnish Kumar had told reporters on Friday that the lead lender would take legal opinion on what to do with the unsolicited bids.

Jet Airways owes Rs 10,000 crore to lenders led by SBI and Punjab National Bank SBI had initiated a sale process for the airline last month, where the consortium had shortlisted the four bidders mentioned above. While these bidders had submitted their expressions of interest, they weren’t bound by any rule to submit a final bid.

On Monday, Jet Airways share price fell 8.14 percent to Rs 144 apiece on the Bombay Stock Exchange while the benchmark Sensex shed 0.99 percent to end the day at 37,090.82 points.