Etihad’s equity partnership in airlines is creating trouble yet again, this time with the perpetually money-losing machine better known as Jet Airways. Etihad, which already owns a 24 percent stake in Jet Airways, has proposed a new financial restructuring and support plan for Jet Airways which will result in an additional investment in the essentially failing airline.
Etihad is set to give Jet Airways $35 million in a cash pre-purchase for Jet Airways’ frequent flyer program, Jet Privilege, which Etihad already has 50.1 percent ownership of. The Abu Dabi-based airline already spent $150 million to purchase the slim majority of shares in 2014.
The exact transaction involves Jet Privilege pre-purchasing discounted mileage redemption seats from Jet Airways. This transaction, generally, is business as usual since separate mileage programs pre-purchase seats to offer members for a redemption of miles.
However, this time it’s not exactly a secret what the funds are for.
The purchase/investment gives Jet Airways immediate cash that will help the airline meet some short-term obligations, such as staff salaries, which sheds some insight to just how financially poor the airline’s situation is. The airline has not been able to pay salaries on time for a good portion of its staff as it has deferred or partially paid salaries to many.
06/10/18 Hemal Gosai/AirlineGeeks