The cash-crunched Jet Airways is likely to get fresh liquidity from the Etihad Airways, which owns 24 percent share in Jet Airways India Ltd. The UAE-based airline has proposed a financial restructuring and support plan for the troubled Jet Airways. The plan includes 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 a majority stake of 50.1 percent in Jet Airways' frequent flyer programme, had said that the proposal has been approved by its majority shareholder.
In an e-mailed statement to financial daily, Mint, Etihad Airways said that "This plan includes a $35 million cash pre-purchase payment to Jet Airways by Jet Privilege, which is majority-owned by Etihad Airways.''
Jet Airways, which has a minority stake of 49.9 percent in the Jet Privilege Private Ltd, also confirmed the development and said that it has concluded a prepaid ticket purchase agreement for $35 million with Jet Privilege Private Ltd under the normal course of business.
The airline said that "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 the normal course of Business between Jet Airways and JPPL."
Depreciating rupee and the rising crude oil prices have given a double blow to the Indian Airlines as it has inflated the operating costs, which is a dollar-dominated practice. Jet Airways is not the only Indian Airlines which is facing the issue of increased operating cost. Indigo reported a loss of 97 percent in its profits as against the last quarter other airlines such as Spicejet has in fact incurred losses on the increased operating cost.
Last month Jet Airways has announced that the airline will raise around about Rs3,500 crore over the course of the next six months through a stake sale in its loyalty programme and infusion of fresh funds into the company. The airline has also planned to cut down on its costs by as much as Rs 2,000 crore over the next two years.