UAE’s Etihad hires turnaround expert Alvarez & Marsal as it weighs Jet Airways bailout

Jet Airways, which controls a sixth of India’s booming aviation market, desperately needs a bailout. (File photo: Reuters)
Updated 27 January 2019
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UAE’s Etihad hires turnaround expert Alvarez & Marsal as it weighs Jet Airways bailout

NEW DELHI/ABU DHABI: Etihad Airways has appointed turnaround specialist Alvarez & Marsal to conduct due diligence on Jet Airways Ltd. as it weighs bailing out the cash-strapped Indian carrier, three sources familiar with the matter told Reuters.
Executives from Alvarez & Marsal are camped in Jet Airways’ offices in Mumbai and are taking stock of the airline’s operations and looking into its financial health and records, one of the sources said.
The Abu Dhabi-based carrier plans to raise its stake in Jet Airways from the current 24 percent but it wants the airline’s founder and chairman Naresh Goyal to give up control, sources have told Reuters.
“Alvarez & Marsal are restructuring consultants. If they are there it means they are looking for stuff to cut,” said a second person who is familiar with the matter.
An Etihad spokeswoman declined to comment. Alvarez & Marsal did not immediately respond to an email seeking comment.
Jet Airways did not respond to an email seeking comment but said last week it is in talks with lenders to resolve its debt problems. It is seeking a cash injection by stakeholders and will make board changes.
Jet Airways, which controls a sixth of India’s booming aviation market, desperately needs a bailout. High fuel taxes, a weak rupee and price competition have squeezed profitability, leaving the airline with net debt of $1.13 billion.
Earlier in January it defaulted on a debt payment to a consortium of banks, led by State Bank of India (SBI), prompting ratings agency ICRA to downgrade the carrier.
The airline also owes money to employees, vendors and lessors — some of whom are considering taking back aircraft, sources have told Reuters.
Jet Airways brought on board two global consultants last year who also have people working out of the airline’s office in Mumbai, the first source said. McKinsey is helping with cost-cutting efforts and Boston Consulting Group (BCG) is looking at ways to increase revenue, he added.
McKinsey did not respond to an email seeking comment. BCG said it would not comment on any company specific matters.
Representatives of both airlines met with creditors, led by Jet’s biggest lender SBI, in Mumbai last week to discuss a proposal that involves Etihad increasing its 24 percent stake, a source told Reuters.
The Abu Dhabi carrier can go up to a maximum of 49 percent according to India’s foreign ownership rules for airlines. Also, if it breaches the 25-percent mark it must adhere to strict capital markets rules.
The markets regulator, Securities and Exchange Board of India (SEBI), said on Thursday it had not yet expressed any “view” on giving such a concession to Jet or Etihad.


Head of Saudi Arabia’s SRC: ‘Ask banks for a mortgage, and we will refinance it’

Updated 25 April 2019
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Head of Saudi Arabia’s SRC: ‘Ask banks for a mortgage, and we will refinance it’

  • SRC CEO Fabrice Susini: One of our key objectives is to ensure that the banks are extending loans to more and more people
  • Extending home-ownership is one of the cornerstones of the Vision 2030 strategy to diversify the economy away from oil production

RIYADH: The head of the state-owned Saudi Real Estate Refinance Company (SRC) has made an unprecedented offer to the Kingdom’s home-seekers to underwrite future mortgages.
Speaking at the Financial Sector Conference in Riyadh, Fabrice Susini, SRC CEO, told the audience: “Ask them (the banks) for a mortgage, and we will refinance it.”
Although Susini later clarified his remarks to show that he still expected normal standards of mortgage applications to be met, the on-stage show of bravado illustrates SRC’s commitment to facilitate home-ownership in the Kingdom.
“Obviously if you have no revenue, no income, poor credit history, that will not apply. Now if you have a job, it is different. We have people in senior positions at big foreign banks that could not get a mortgage,” he explained.
He said that Saudi banks have traditionally assessed mortgages on the basis of “flow stability” of earnings. Government employees, or those of big corporations like Saudi Aramco and SABIC, found it easy to get mortgages “because you were there for life.”
“One of our key objectives is to ensure that the banks are extending loans to more and more people. The government is pushing for entrepreneurship, private development, private jobs. If you work in the private sector and cannot get a mortgage the next thing you will do is go to the government for a job,” Susini said.
Extending home-ownership is one of the cornerstones of the Vision 2030 strategy to diversify the economy away from oil production. Saudi Arabia has one of the lowest rates of mortgage penetration of any G20 country — in single digit percentages, compared with others at up to 50 percent.