Jun 18, 2013, 11.43 AM IST | Source: Moneycontrol.com

Will Etihad deal help Jet Air pare debt in FY14?

Post the Etihad deal announcement, Naresh Goyal, Jet Air's chairman said the deal will further strengthen the airline's balance sheet and will also open up more avenues for improving revenues. "The deal will also accelerate returns to sustain profitability," he had added.

Jet Airways  is likely to pare a significant chunk of its debt by the year-end after Etihad invests around Rs 2000 crore for acquiring 24 percent stake in the carrier, suggest media reports.

The deal is first of its kind after the government relaxed foreign direct investment rules late last year.

Deal with Etihad will provide Jet Air to improve credit perception as well as cash to retire debt, say experts. This is how it will work for Jet Air:

Currently, of the Rs 13000 crore debt, Rs 5000 crore is towards working capital loans and the remaining was taken for acquiring aircraft.

Even if Etihad infuses a small portion of equity, it will certainly help the carrier bring down working capital debt level.

In addition, Jet has also entered into a sale and lease-back agreement with Etihad for its three pairs of slots at London's Heathrow airport for five years. This deal will also bring in around Rs 390 crore to the carrier

In an earnings call post FY13 numbers announcement, Jet Air's management had said that they are looking to repay around USD 500 million and once Etihad injects equity into the airline, paring debt would not be a problem.

Read This: Jet Air up 14% after Etihad deal


 

Jet Airways stock price

On April 17, 2014, Jet Airways closed at Rs 279.90, up Rs 5.20, or 1.89 percent. The 52-week high of the share was Rs 688.60 and the 52-week low was Rs 210.25.


The latest book value of the company is Rs -27.75 per share. At current value, the price-to-book value of the company was -10.09.

READ MORE ON  Jet Airways, FIPB, Etihad, Naresh Goyal
Set email alert for

ADS BY GOOGLE

Buy & sell politicians on Power Play
- the political stock exchange

Price Update

Arvind Kejriwal

1700.91 -4.64 -0.27%

41868

Bought today

34966

Sold today

0.32%

User holding

video of the day

Chandra says satisfied with TCS' FY14, FY15 to be better

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.