By Aditi Shah
NEWDELHI (Reuters) – Etihad Airways is holding talks with Jet Airways Ltd <JET.NS> and its bankers on a rescue plan for the debt-laden Indian carrier, two sources aware of the matter told Reuters.
Executives from Etihad and Jet have met some of the airline’s bankers in Mumbai in recent days to discuss ways to address its cash flow issues and evaluate the carrier’s future business plan, the sources said.
Etihad, which owns 24 percent stake in Jet Airways, is also considering investing fresh funds in the airline if it can agree on the structure, one of the sources said, adding that no deal has been finalised.
The sources did not want to be named as the discussions are private.
Jet, which is India’s biggest full service carrier by market share, is in desperate need of cash. The 25-year-old airline, founded by Naresh Goyal, owes money to lessors and vendors, has delayed salary payments to pilots and senior executives and is cutting flights on non-profitable routes to save money.
India is one of the world’s fastest-growing domestic aviation markets but high fuel prices, a weak rupee and intense price wars in the country, which is dominated by no-frills airlines like Interglobe Aviation Ltd’s <INGL.NS> IndiGo, has exacerbated Jet’s woes in recent months.
Etihad has already come to Jet’s rescue once when it picked up a 24 percent stake in the carrier in 2013 but the situation is different this time.
While the Abu Dhabi-based carrier is invested in Jet, it has lost money in other airline ventures such as Alitalia and Air Berlin and may be wary of loosening the purse strings again, said another source.
Also, with tighter lending norms and a liquidity crisis in India, bankers may be hesitant to lend more to the struggling airline.
On Tuesday news channel CNBC-TV18 reported citing sources that Jet is close to finalising a deal under which Etihad will inject fresh funds in the airline.
Goyal, who is founder and majority shareholder, has assured the airline’s pilot union that the funding, which will likely result in route restructuring and more flights to Abu Dhabi, could take place as early as mid-December, the channel said.
Goyal has also assured pilots that there will be no delays in salary payments from April 1, according to the channel.
Jet and Etihad did not immediately responded to Reuters’ emails seeking comment.
(Additional reporting by Stanley Carvalho in Abu Dhabi and Chris Thomas in Bengaluru; Editing by Kirsten Donovan and David Evans)