Jet Airways and Etihad Airways forge strategic alliance under FDI policy of government of India
Etihad Airways to invest US$379 million for a 24 per cent stake in Jet Airways

• Strategic investment under FDI policy of the Government of India will deliver wide-ranging revenue growth and cost synergy opportunities for both airlines
• Alliance will bring significant passenger benefits with expanded codesharing, creating a combined network of 140 destinations
• Alliance will bring significant benefits to the Indian economy, both in terms of growth, job creation, trade and tourism
• Jet Airways passengers from 23 cities in India to gain direct access to an expanded global network
• Jet Airways to enhance its services from its primary hubs of Delhi and Mumbai, and introduce new flights from Hyderabad and Bangalore
• The strategic alliance between the two airlines will bring additional traffic, frequencies and revenues to metro airports, as well as other airports of AAI
• New India-Abu Dhabi routes and Jet Airways to establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East
• The strategic investment enables Etihad Airways to tap into India’s fast-growing 42 million strong travel market
• Both airlines' passengers will benefit from fully integrated frequent flyer programs with reciprocal ‘earn-and-burn’
• Alliance will result in both consumer benefits and/or all round efficiencies
• This strategic investment with a US$600 million commitment from Etihad Airways will help further strengthening of Jet Airways financial position.

Etihad Airways of the United Arab Emirates and Jet Airways of India today announced that the UAE national carrier has agreed to subscribe for 27,263,372 new shares in Jet Airways at a price of INR754.74 per share. The value of this equity investment is US$379 million and will result in Etihad Airways holding 24 per cent of the enlarged share capital of Jet Airways.

Etihad Airways' wider overall commitment to Jet Airways includes the injection of US$220 million to create and strengthen a wide-ranging partnership between the two carriers.

As part of this Etihad Airways paid US$70 million to purchase Jet Airways’ three pairs of Heathrow slots through the sale and lease back agreement announced on 27 February 2013. Jet Airways continues to operate flights to London utilising these slots.

An amount of US$150 million will be invested by Etihad Airways by way of a majority equity investment in Jet Airways’ frequent flyer program "Jet Privilege", subject to appropriate regulatory and corporate approvals and final commercial agreements which are expected to be completed within the next six months.

Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi, providing an ever wider choice to the travelling public. They will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways’ growing global network.

Passengers from 23 cities in India will benefit from direct connections to international destinations. New flights from Jet Airways’ home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways’ vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions.

Details of the investment were unveiled by Etihad Airways President and Chief Executive Officer, James Hogan, and the Chairman of Jet Airways, Naresh Goyal. Mr Hogan said: “We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines.

“It is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years.

“The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world.”

“We look forward to collaborating with Jet Airways and constructively working together with them and their stakeholders to build a sustainable, competitive and profitable airline.”

Mr Goyal said: “I would like to thank the Government of India, especially the Ministries of Civil Aviation, Commerce and Industry, and Finance, for having the foresight to introduce the historic reform of allowing foreign direct investment into civil aviation in India. Infusion of FDI in the domestic sector will result in the improvement of the economics of aviation, grow traffic at our airports and create job opportunities.

“I am extremely happy to be in a partnership with an airline that shares our customer-centric operational philosophy and ethos. I have no doubt that this partnership with Etihad Airways is a win-win situation for all our stakeholders, especially our guests, who will now have access to a much expanded global network.
“This transaction further strengthens the balance sheet of Jet Airways and, more importantly, underpins future revenue streams, which will accelerate our return to sustainable profitability and liquidity.”

A key component of the wide-ranging partnership is expanded codesharing on flights with passengers benefiting from reciprocal ‘earn-and-burn’ rights on the airlines’ frequent flyer programs.

The proposed codeshare expansion will significantly enable Etihad Airways to tap into India’s rapidly growing travel market, providing additional passenger traffic to Etihad Airways’ Middle Eastern, North American and European destinations, and give Jet Airways passengers from various cities access to an expanded network. Current estimates predict the size of the Indian market to grow to 42 million travellers over the next five years at a rate of 10 per cent per year, while the Indian middle class, which provides the majority of air travel demand, is forecast to grow by 200 million, over the next eight years.

Etihad Airways currently flies to nine Indian destinations including Delhi, Chennai, Mumbai, Kozhikode, Thiruvananthapuram, Hyderabad, Bangalore, Ahmedabad and Kochi, with a total of 59 flights per week.

The partnership will also help drive a significant increase in traffic growth through Abu Dhabi International Airport, as well as Jet Airways’ hubs of Mumbai and Delhi international airports.

Key benefits for both airlines will flow from synergies and cost savings in areas including fleet acquisition, maintenance, product development and training. The airlines will explore joint purchasing opportunities for fuel, spare parts, equipment and catering supplies, as well as external services such as insurance and technology support.

Other areas of co-operation will include joint training of pilots, cabin crew and engineers, as well as maintenance of common aircraft types and the consolidation of guest loyalty programs. A joint project management office will be set up to ensure delivery of all synergy benefits to both parties.

Substantial ownership and effective control will remain with Indian nationals, with Mr Goyal as the non-executive Chairman holding 51 per cent of the company. Etihad Airways’ investment in Jet Airways follows the minority equity stakes taken by the airline in airberlin, Air Seychelles, Virgin Australia, and Aer Lingus over the last 12 months.

Etihad is being advised by HSBC, DLA Piper, Amarchand & Mangaldas & Suresh A. Shroff & Co and PricewaterhouseCoopers on this transaction. Jet Airways is being advised by Mr Harish Salve, Gagrats, ELP, Ernst & Young, DSP Merrill Lynch Limited and Credit Suisse.

Another vote of confidence for efficient, reliable A330

Etihad Airways, the national airline of the United Arab Emirates has signed a firm order for two additional A330-200 passenger aircraft as part of the carrier’s continued growth plans.

These newly ordered aircraft, like Etihad’s current A330 fleet, will be powered by Rolls-Royce Trent 700 engines. Etihad Airways has also converted seven of its previously ordered A320s to the larger and increasingly popular A321 model.

Etihad Airways President and Chief Executive Officer, James Hogan said: “The reliable and highly versatile Airbus A330-200 has been an integral part of our global passenger and cargo success. As our operations and network continue to grow in scale, we feel the A330-200 is the right fleet type to expand with. Our decision to convert seven of our A320s on order into A321s reflects the increasingly strong demand we are seeing across our different routes and we look forward to taking delivery of our first in November 2013.”

“Winning a fifth repeat order from Etihad for A330s is without a doubt a strong endorsement for the aircraft’s unique combination of unbeatable economics, versatility and fuel efficiency,” said John Leahy, Airbus Chief Operating Officer, Customers. “In response to the continuing strong demand, we’re making the A330 better and better, with for example new higher weight variants which offer our customers more payload-range capability with the same high operational reliability.”

The A330 Family, which spans 250 to 300 seats, and includes Freighter, VIP, and Military Transport/Tanker variants, has now attracted more than 1,200 orders and around 900 aircraft are flying with over 90 operators worldwide. Ever since the original version of the A330-300 entered service, the hallmark has been its very efficient operating economics and benchmark reliability above 99 percent.

30 October 2012 Press Release

Ideal solution for most efficient freight operations

Etihad Airways, the national airline of the United Arab Emirates has signed a firm order for two additional A330-200F freighter aircraft to meet their growth plans in the cargo market. The airline was a launch customer and the launch operator of the A330-200F, having taken delivery of its first aircraft at the Farnborough International Airshow in 2010. Today’s order will increase the fleet of the airline’s cargo business, Etihad Crystal Cargo, to four A330-200F freighters.

“We are strongly committed to building our presence in the cargo sector with the platform of Abu Dhabi as our hub to connect global trade lanes,” Etihad Airways President and Chief Executive Officer, Mr James Hogan, said. “The A330-200F has been a key part of our recent success in the market. We are very pleased with its high reliability and versatility, and that’s why we are keen to expand this fleet type,” he said.

“This repeat order by Etihad underlines the key role the A330-200F is playing alongside larger freighters. The A330-200F enables Etihad to optimise its network by addressing markets which do not make business sense with large freighters,” said John Leahy, Airbus Chief Operating Officer, Customers. “In a challenging economic environment, with high fuel prices and yields under pressure, the A330-200F helps match capacity neatly with demand which allows for efficient cargo operations.”

The A330-200F, which has just celebrated a successful first year of efficient operation with a high operational reliability topping 99.5%, can carry up to 70 tonnes of payload and offer a range of up to 4,000nm. Nine A330-200F freighters are now flying with four operators in the Middle East, Europe and Asia.

The A330 Family, which spans 200 to 400 seats for the passenger variants, also includes Freighter, VIP, and Multi Role Tanker Transport (MRTT) variants, and has attracted close to 1,200 orders.

26 January 2012 Airbus Press Release