New Delhi: With Jet Airways facing the worst financial crisis in its 25-year-old existence, Etihad Airways has offered to sell its 24 percent stake in the cash-strapped carrier, two sources said. They added that this would allow Jet's lenders to decide on their future plan. The Abu Dhabi-based airline has said it will not take part in Jet Airways' resolution plan, following a meeting between Etihad Chief Executive Officer Tony Douglas and State Bank of India Chairman Rajnish Kumar, the sources said.
Etihad had purchased a stake in Jet for approximately US$ 379 million in April 2013.
The carrier has grounded most of its planes, defaulted on loan repayments, delayed salaries and delayed payments to most vendors, including aircraft leasing companies. Lenders are now looking for an alternative plan to resolve their dues.
Etihad had brought up concerns about a few of the plan's aspects, which the lenders were reluctant to change. The issues comprised the "right of recompense" that lenders from the country were looking for after the resolution plan is put into practice.
This right would have made sure that once the Abu Dhabi-based carrier's equity investment started producing returns, it would pay back part of the haircut after Jet's lenders took a haircut on their loan exposures.
Etihad had an issue with the eventual stake it would own in the carrier after it infuses the equity required to resolve operations. It was looking to own 26 percent stake at least in Jet after it infused more equity following the implementation of the resolution plan, the two sources said.