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

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.


Saudi Arabia’s Red Sea mega project awards contracts for international airport

Updated 13 July 2020

Saudi Arabia’s Red Sea mega project awards contracts for international airport

  • Saudi Arabia plans to develop resorts on 22 islands off the Red Sea coast, offering a nature reserve, coral reef diving and heritage sites
  • Red Sea Development Co, backed by Saudi Arabia’s sovereign fund, the Public Investment Fund (PIF), plans to build the first phase by 2022

RIYADH: Saudi Arabia’s Red Sea Development Company said on Monday it had awarded infrastructure contracts for an international airport that is due to open in 2022.
The company, which is developing a huge Red Sea tourism project, said the contracts were awarded to Nesma & Partners Contracting Co. Ltd. and Almabani General Contractors.
Saudi Arabia plans to develop resorts on 22 islands off the Red Sea coast, offering a nature reserve, coral reef diving and heritage sites.
Red Sea Development Co, backed by Saudi Arabia’s sovereign fund, the Public Investment Fund (PIF), plans to build the first phase by 2022. It aims to attract 300,000 tourists a year in the first phase and 800,000 to 1 million once the development is complete.
Red Sea is one of three major projects backed by PIF, along with the $500 billion NEOM economic zone and the Qiddiya entertainment project.
Saudi Arabia’s NEOM, which is building a $500 billion mega economic zone, said last week it had signed an agreement with Air Products and Saudi Arabia’s ACWA Power for a $5 billion green hydrogen-based ammonia production facility.