Jet etihad deal ii

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Jet etihad deal ii

  1. 1. All you need to know about Jet-Etihad deal Jet Airways today approves 24% preferencial share allotment to Etihad Aneesh Phadnis | Mumbai November 20, 2013 Last Updated at 13:03 IST Club Mahindra Membership Holiday at Over 40 Resorts. Sign Up Now & Get Upto INR. 71,000 Off. clubmahindra.com/Become_A_Member Ads by Google Tweet 6 Add to My Page Read more on: Etihad | Share Allotment | Jet Airways Jet Airways today approved the much awaited 24% preferencial share allotment to Etihad Airways. The deal has been going back and forth for sometime now. Jet Airways also approved the induction of Etihad CEO and CFO on its board. We bring to you the timeline and the nuts and bolts of the deal: April 24 - Jet Airways and Etihad sign strategic alliance. Etihad agrees to pick up 24 percent stake in Jet Airways for about Rs 2060 crore May 24 - Jet Airways share holders approve sale of stake to Etihad. The airline defers resolutions to amend company's articles of association May 27 - The two airlines amend shareholder agreement to address shareholder and Sebi concerns on control and ownership May 29 and 31 - Subramanian Swamy and Jaswant Singh complain to Prime Minister against the deal June 13 - PMO writes to civil aviation ministry to redraft the cabinet note on Abu Dhabi traffic rights June 14 - Foreign Investment Promotion Board defers approval to Jet-Etihad alliance July 2 - PMO defends the Abu Dhabi bilaterals, says there is no division in government on the issue July 29 - FIPB gives a conditional approval to Jet-Etihad deal Sept 3 - Cabinet approves the enhanced traffic rights on India-Abu Dhabi route Sept 16 - Swamy files a petition in Supreme Court against the deal, demands CBI probe Sept 25 - Sebi writes to Swamy, says the agreement does not trigger will not trigger an open offer Oct 3 - Cabinet Committee of Economic Affairs clears the deal Nov 12 - Competition Commission of India gives its clearance to the deal As part of the deal, there will be an overall cash infusion of $ 750 million in debt and equity. The infusion will help Jet cut its debt from $2.1 billion to $ 1.5 billion
  2. 2. $379 million Equity investment $150 million Investment in Jet’s frequent-flyer programme $150-million loan Assistance to be provided in securing debt $70 million Sale and lease-back of Jet’s Heathrow slots Strategic investment under FDI policy of the Government of India will deliver wide-ranging revenue growth and cost synegy opportunities for both airlines Alliance will bring significant benefits to the Indian economy, both in terms of growth, job creation, trade and tourism Jet Airways passengers from 23 cities in India to gain direct access to an expanded global network Jet Airways to enhance its services from its primary hubs of Delhi and Mumbai, and introduce new flights from Hyderabad and Bangalore The strategic alliance between the two airlines will bring additional traffic, frequencies and revenues to metro airports, as well as other airports of AAI New India-Abu Dhabi routes and Jet Airways to establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East The strategic investment enables Etihad Airways to tap into India’s fast- growing 42 million strong travel market Both airlines' passengers will benefit from fully integrated frequent flyer programs with reciprocal ‘earn-and-burn’ Alliance will result in both consumer benefits and/or all round efficiencies This strategic investment with a US$600 million commitment from Etihad Airways will help further strengthening of Jet Airways financial position. FDI investments in aviation after the government relaxed rules in 2012 Jet - Etihad deal - $379 million. Etihad will hold 24%. Jet chairman Naresh Goyal retains 51%. Public shareholding - 25% Tata Singapore Airlines - Initital investment $100 million. Singapore Airlines will invest $49 million and the balance will be invested by Tata group Tata AirAsia - AirAsia to hold 49% investment, Tata Group will hold 30% while 21% will be held by telestra Tradeplace. The initial investment is around Rs 80 Etihad-Jet Airways deal details UAE carrier takes 24% stake in Indian operator
  3. 3. By WAM Published Thursday, April 25, 2013 Etihad Airways of the United Arab Emirates and Jet Airways of India yesterday announced that the UAE national carrier has agreed to subscribe for 27,263,372 new shares in Jet Airways at a price of INR754.74 per share. The value of this equity investment is $379 million and will result in Etihad Airways holding 24 per cent of the enlarged share capital of Jet Airways. Etihad Airways' wider overall commitment to Jet Airways includes the injection of $220m to create and strengthen a wide-ranging partnership between the two carriers. As part of this Etihad Airways paid $70 million to purchase Jet Airways' three pairs of Heathrow slots through the sale and lease back agreement announced on 27 February 2013. Jet Airways continues to operate flights to London utilising these slots. An amount of $150 million will be invested by Etihad Airways by way of a majority equity investment in Jet Airways' frequent flyer program "Jet Privilege", subject to appropriate regulatory and corporate approvals and final commercial agreements which are expected to be completed within the next six months. Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi, providing an ever wider choice to the travelling public. They will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways' growing global network. Passengers from 23 cities in India will benefit from direct connections to international destinations. New flights from Jet Airways' home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways' vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions. Details of the investment were unveiled by Etihad Airways President and Chief Executive Officer, James Hogan, and the Chairman of Jet Airways, Naresh Goyal. Hogan said: "We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines. "It is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years. "The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world. "We look forward to collaborating with Jet Airways and constructively working together with them and their stakeholders to build a sustainable, competitive and profitable airline." Goyal said: "I would like to thank the Government of India, especially the Ministries of Civil Aviation, Commerce and Industry, and Finance, for having the foresight to introduce the historic reform of allowing foreign direct investment into civil aviation in India. Infusion of FDI in the domestic sector will result in the improvement of the economics of aviation, grow traffic at our airports, and create job opportunities. "I am extremely happy to be in a partnership with an airline that shares our customer-centric operational philosophy and ethos. I have no doubt that this partnership with Etihad Airways is a win-win situation for all our stakeholders, especially our guests, who will now have access to a much expanded global network.
  4. 4. "This transaction further strengthens the balance sheet of Jet Airways and, more importantly, underpins future revenue streams, which will accelerate our return to sustainable profitability and liquidity." A key component of the wide-ranging partnership is expanded codesharing on flights with passengers benefiting from reciprocal 'earn-and-burn' rights on the airlines' frequent flyer programs. The proposed codeshare expansion will significantly enable Etihad Airways to tap into India's rapidly growing travel market, providing additional passenger traffic to Etihad Airways' Middle Eastern, North American and European destinations, and give Jet Airways passengers from various cities access to an expanded network. Current estimates predict the size of the Indian market to grow to 42 million travellers over the next five years at a rate of 10 per cent per year, while the Indian middle class, which provides the majority of air travel demand, is forecast to grow by 200 million, over the next eight years. Etihad Airways currently flies to nine Indian destinations including Delhi, Chennai, Mumbai, Kozhikode, Thiruvananthapuram, Hyderabad, Bangalore, Ahmedabad and Kochi, with a total of 59 flights per week. The partnership will also help drive a significant increase in traffic growth through Abu Dhabi International Airport, as well as Jet Airways' hubs of Mumbai and Delhi international airports. Key benefits for both airlines will flow from synergies and cost savings in areas including fleet acquisition, maintenance, product development and training. The airlines will explore joint purchasing opportunities for fuel, spare parts, equipment and catering supplies, as well as external services such as insurance and technology support. Other areas of co-operation will include joint training of pilots, cabin crew and engineers, as well as maintenance of common aircraft types and the consolidation of guest loyalty programs. A joint project management office will be set up to ensure delivery of all synergy benefits to both parties. Substantial ownership and effective control will remain with Indian nationals, with Mr Goyal as the non- executive Chairman holding 51 per cent of the company. Etihad Airways' investment in Jet Airways follows the minority equity stakes taken by the airline in airberlin, Air Seychelles, Virgin Australia, and Aer Lingus over the last 12 months. Etihad is being advised by HSBC, DLA Piper, Amarchand '&' Mangaldas and Suresh A. Shroff and Co and PricewaterhouseCoopers on this transaction. Jet Airways is being advised by Harish Salve, Gagrats, ELP, Ernst and Young, DSP Merrill Lynch Limited and Credit Suisse. Jet Airways – Etihad Airways Strategic Alliance Jet Airways and Etihad Airways are proud to announce the conclusion of the transaction for the subscription of 24 per cent minority equity stake in Jet Airways. This follows all government and regulatory approvals received on the 12th of November 2013. The infusion of foreign direct investment in the Indian aviation sector will result in economies of scale, growth in traffic at Indian airports and will create job opportunities across the aviation and tourism sectors. It will greatly benefit all our stakeholders whilst significantly benefitting our guests who will now have access to a more expanded global network, enhanced connectivity for tourists, business travellers,and the wider travelling public.
  5. 5. India is one of the largest and fastest-growing markets in the world. Through this association, Jet Airways and Etihad Airways will both be strengthened as will be the economies of India and the UAE. By linking our two networks and adding new flights, new routes and more code-share options, travel to, from and within India will become more accessible/ convenient. Etihad Airways and Jet Airways will combine their network of 130 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding it’s reach through Etihad Airways’ growing global network. Under the strategic partnership, both airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi thus providing an ever wider choice to the travelling public. Guests from 55 cities in India will benefit from connections to international destinations. New flights from our home hubs of Mumbai and Delhi and other metro airports will further strengthen our current operations from these airports. Our vision continues to be to develop Delhi and Mumbai airports as our primary home hubs and connecting them to Asia, Europe, Africa and other regions. The Jet Airways group currently operates a fleet of 113 state-of-the-art wide and narrow-bodied aircraft under the Jet Airways and JetKonnect brand. Jet sells 24% equity to Etihad Tweet PTI | Nov 20, 2013, 04.33PM IST NEW DELHI: Jet Airways and Etihad on Wednesday announced closure of a Rs 2,069 crore deal for the Abu Dhabi-based carrier to pick up 24 per cent equity in the Indian airline, marking the first FDI infusion by an airline in the Indian aviation sector. Maintaining that all requisite regulatory approvals from Indian authorities have been obtained on November 12, the two airlines said Jet has "issued and allotted 27,263,372 equity shares of a face value of Rs 10 each at a price of Rs 754.7361607 per equity share on a preferential basis to Etihad Airways." Following the allotment of equity shares on preferential basis to Etihad Airways, Etihad Airways holds 24 per cent of the post-issue paid up share capital of Jet Airways "on a fully diluted basis". As per legal requirements, 51 per cent stake would be held by Jet and its Chairman and promoterNaresh Goyal. In a statement, the two carriers also announced that Etihad president and CEO James Hoganand its chief financial officer have been appointed as additional directors on the board of directors of Jet from today. The announcement came shortly after a Jet board meeting in Mumbai on Wednesday. Goyal and Hogan said "the collaboration between the airlines would commence
  6. 6. immediately with a view to delivering network and service benefits to customers as soon as possible. Specific details will be released progressively." The Jet stake sale deal is the first of its kind in an Indian airline. The announcements by Malaysian carrier AirAsia to set up AirAsia India and by Singapore Airlines to set up a joint venture airline with Tata Sons, are yet to fructify.

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