Jet Airways has been on a massive course correction over the past six months or so. Apparently, in September, they were in a liquidity crunch, so they started to implement measures to save money, a lot of which included cutbacks from the passenger experience.

• Jet Airways cuts meals for Deal and Light passengers
• Jet Airways passengers denied Lounge Access in Mumbai Airport
• Jet Airways meal cutbacks start
• Jet Airways lounge access withdrawal for Gold & Platinum Members
• Jet Airways will drop meal service on most Domestic Economy Fares in 2019

All of this, apart from apparently not paying their salary dues in full, and cutting out on various flights. Jet Airways has also stopped receiving their new Boeing 737 MAX aircraft, and at least two of them are in storage at the moment at the Boeing facility in Washington, USA. Here is an update on the routes that are gone.

• Jet Airways massive International route consolidation coming December 2018
• Reading into Jet Airways Q3 Results 2018
• Jet Airways Middle-East Network changes
• Jet Airways Domestic Route network being cut back
• Jet Airways’ shutting down another 7 stations including 4 North-East stations

In the face of all this, Jet Airways reached out to the Tata group for help. I was not very excited for this play, purely because I did not see it happening in the first place. The markets and people were all rooting for it, I was as well, but it was just something that fizzled out on its own. At that time, I wrote for my CNBC column, that it would not be a deal that would happen overnight. It did not happen, of course, and the reason for that turned out to be the intention of 9W’s promoter to not give up majority control.

Jet Airways has ever since been trying to talk up to Etihad Airways, to throw a lifeline to Jet Airways. Many other people have been impatient with this, especially the banks, because they did not want to go ahead and give more money to Jet Airways and not have it back like the Kingfisher days. In the meanwhile fares have continued to be low, and the no-frill carriers continue to price aggressively, pushing Jet Airways to keep pricing low as well.

It turns out, Etihad Airways wanted the same thing from Jet Airways like what the Tatas did, the chairman out of the picture, and the airline being run by a professional management. As per the rules, Etihad Airways could easily own up to 49% of the airline, but the management has to be Indian, so it does not look like Etihad would be able to bring in their own turnaround experts at the moment. The banks have refused to give any more money to Jet Airways till they don’t see more funds being infused by the promoters, and they could make up the rest.

Bloomberg, via CNBC-TV18, is reporting that Etihad has made up its mind to raise its 24% stake to 49% in the airline. The promoter will have to give up a lot of his own stake, and as per the reports, the deal with leave him with about 20% stake in the airline, and his voting rights will be capped at 10%. Not just that, Naresh Goyal would leave the board, and his son would take his place, but as a non-executive director.

There is a lot of ifs and buts in this deal, but what I do find interesting is that the airline chose to partner with Etihad Airways all over again, which hasn’t had success at turning around other carriers such as Air Berlin, and has all their invested carriers struggling, including Air Seychelles and Jet Airways. Some of their investment bets have lead to their own carrier being bogged by losses over the years.

The contours of the deal are not known, and it is not even known at the moment if the airline is going to get just about enough to survive, or to thrive again? Also, with Etihad taking such a big stake in the airline, this might mean the cooperation with Delta would stall again? Anyhow, the Jet Airways share price went up in the process 19% today, so that should speak something about the expectation people have.

There is a lot to look over the shoulder for on this new deal, and I am just about starting to wrap my head around what could be the many things that could happen if this deal goes through. I will elaborate my views in a separate writeup later.

What do you think about the deal between Etihad Airways and Jet Airways, if it were to fructify?