Etihad begins ground work to induct Jet Airways

The long wait for regulatory clearances for the Jet-Etihad deal is frustrating UAE's national carrier. However, it has begun ground work to induct its new partner, reports CNBC-TV18’s Sajeet Manghat from Abu Dhabi.

The deal is taking forever, exclaimed a senior Etihad official, reflecting the mood at the headquarters of the airline in Abu Dhabi. It took nearly two quarters to negotiate before a sealing the deal. Announced on April 24, the pact has already seen four extensions from the earlier agreed July-end. The latest extension has taken the date till the end of November. Also read: Jet-Etihad deal will dilute Air India's value: Swamy Jet Airways, which posted its biggest ever quarterly loss, expects the deal to close by the end of the calendar year. While the cabinet has cleared the deal, the Competition Commission of India’s (CCI) approval is still pending. Once completed, it will allow equity infusion of nearly USD 300 million into the Indian carrier. It will also bring in USD 150 million in cash for the stake sale in the Jet privileges program. Etihad has already paid USD 70 million for leasing two slots at Heathrow for next five years. It will also facilitate soft loans to replace high cost debt of Jet Airways, which will reduce the annual interest cost by 50-70 million. Jet Airways has a gross debt of nearly USD 1.9 billion at the end of second quarter. As a part of the process, Jet Airways has already signed code share arrangements with partner airlines with the latest being Air Seychelles. The airline is also believed to be in talks with Air Berlin for a code share program. Etihad has equity investments in many of its partners like - Air Berlin, Air Seychelles, Air Serbia and Virgin Australia. The deal will also allow Jet Airways to access favourable terms when leasing aircrafts or leasing them out. Jet recently leased two aircrafts to Air Seychelles. Etihad currently operates from four cities in India and has sought permission for flying from eight more cities. The air service agreement between India and UAE allows addition of 36,670 seats over the next three years. Etihad wants to ensure that all long distance travel from India to the west is serviced by its partner Jet and with a stop over at Abu Dhabi. Etihad is also deriving comfort from the fact that Tatas, AirAsia India and Singapore Airlines have taken a USD 550 million bet on India despite facing headwinds.