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.


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
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Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.