Jet Airways has been undergoing financial stress lately, and this has been played up by the widespread reporting by the media on the issue. As one of India’s most visible airline brands, this is on expected lines that people would be worried about how this would impact their travel plans. Last week, it seemed that the trouble had blown over, except when they decided to postpone their Q1 results, the speculation was back.

However, one of the most interesting questions I have been receiving all of the past two weeks was about how safe are the JPMiles people collected? I posted my thoughts here, where I’d mentioned that those JPMiles look safe as of now.

While Jet Airways is trying many ways to secure the funding required to keep the airline afloat, and it would be truly unfortunate if anything happens in their 25th year of operations, it seems one of the many ideas on the table is a sale of their equity stake in their loyalty program JetPrivilege.

As a recap, Jet Airways had spun off the loyalty program into a separate company in 2013. In 2014, when they made a stake sale to Etihad Airways, a 50.1% stake sale of the JetPrivilege program holding company was also made to Etihad for a consideration of $150 Million, valuing the program at approx $300 million. At that point in time, it was one nice way of tying a deal which required infusing cash into the airline rather than just a restructuring of the airlines’ equity.

Since then, the program has been run as an independent company, morphing into India’s largest loyalty and rewards program, with perhaps one of the most experienced team in loyalty rewards in India at the helm.

The program has now crossed 8 million members as per the last reported numbers. While Etihad is the majority owner of the program, the most important customer for the program continues to be Jet Airways, which is buying JPMiles to award to their members from JetPrivilege. As I mentioned prior, JetPrivilege continues to be a profitable business on its own.

Bloomberg ran a story last evening that JetPrivilege is now in play again. This time around, it seems that Blackstone, one of the world’s biggest Private Equity players is interested in picking up a stake in the program. As per Bloomberg,

The private equity firm has expressed interest in a deal that could value Jet Privilege Pvt at about 30 billion rupees ($429 million) to 40 billion rupees($572 million), according to the people, who asked not to be identified because the information is private.

Now, this doesn’t mean Jet Airways is washing their hands off the program. The deal is contingent on Jet Airways and Etihad remaining invested in the airline states the report. Of course, Jet Airways will continue to be a customer, a key one at that, because not only do they lend the name to the program (the Jet part), but also they aren’t giving away one of their remaining key advantages anytime soon to the LCCs.

This is not a firm and done deal yet, so there could be more bidders popping up as well. Bloomberg also reports that the program reported a profit of INR 1.77 billion ($25 million approximately) last year, which is not bad at all from the perspective that they just deal in one product, Airmiles!

Before people get worried, they shouldn’t. Time and time again, airlines have monetised their airmiles program to survive. Amex prepaid for $500 million worth of Skymiles back in the day when Delta was trying to stave off a bankruptcy. Virgin Australia sold one-third of their FFP to Affinity Equity Partners for $242 million.

The view from the table is that what if something happens to Jet Airways? I don’t think and I hope that wouldn’t happen. While I’m aware that things are not as rosy given the current economic scenario and the impact it has on them, the airline has been a fighter for 25 years and it surely isn’t going down so easy. The scenario with the banks is, of course, looking to be not the best right now given the last time an airline took loans and never paid them back.

But making a run on your JPMiles isn’t going to help. It is not going to help those who really really need those tickets, and it isn’t going to help you get the most value of your miles.

I’m of course keen to hear other views too, and I’ll love to hear your take on this issue as well. What do you think of a potential JetPrivilege Sale to a private equity firm?