In a method, subsequently, Etihad has a Midas contact in reverse however then airline trade world over has been witnessing plummeting fortunes.
Chastened by its bitter overseas experiences, Etihad appears to be cautious with the revival of Jet Airways. Once bitten, twice shy. Etihad has been twice bitten and therefore is being further cautious to the purpose of eager to have the cake and eat it too.
It has reportedly provided to take a minority stake in Jet Airways topic to the State Bank of India-led (SBI) consortium of banks pumping extra loans and the Securities and Exchange Board of India (SEBI) exempting it from making public supply. Its is a non-binding supply.
It desires to hedge its bets by roping within the India’s nascent sovereign wealth fund, National Investment and Infrastructure Fund (NIIF) launched in 2015, as the brand new joint promoter. NIIF, clearly, would play second fiddle to Etihad even whereas sinking in more cash.
Etihad Airways’ resolution to bid for Jet Airways may presumably be a approach to protect the bilateral it was given, in addition to to guard its India feed. Its resolution to position a conditional and non-binding bid follows the ouster of Naresh Goyal from the board room in addition to from main fairness stake holder. It additionally appears to have received over the SBI-led banks’ resistance to shut to 80 % haircut. Etihad appears to have gotten all that it needed as a precondition for a larger position as a strategic investor.
Etihad finds Indian market too profitable to surrender particularly the 60,000 seats it get below the bilateral which it fears could also be withdrawn by the Indian authorities ought to its dedication in the direction of Jet Airways is seen to be waning. But the Indian officialdom appears to have blinked first. While Etihad may not make a great deal of cash from its Indian investments in Jet Airways within the foreseeable future, it’s coveting the large Indian passenger visitors to the US and Europe through the Middle East hubs. But what’s in it for SBI-led banks and NIIF other than a distant dream of Jet Airways turning the nook and paying again the loans.
How did NIIF permit itself to be provided as a sacrificial lamb? It is registered as an Alternate Investment Fund (AIF) with the market regulator SEBI with three essential goals — infrastructure investments by becoming a member of robust working and monetary companions, investing in fund of funds and investing in strategic assets. One wonders which of the three goals goes to be fulfilled by investing in Jet Airways.
Has the federal government been naïve in asking NIIF to don the robes of knight to rescue Jet Airways? Critics and detractors are certain to surprise too how come the federal government selected its sovereign wealth fund to bail out a non-public sector service when its personal airline, Air India, is down within the dumps. After all, a public sector enterprise (PSU) has a extra justifiable declare over authorities funds vis-à-vis a non-public sector rival. Bailing out a non-public sector rival with authorities funds as well as would make the cost of crony capitalism stick.
(The author is a senior columnist and tweets @smurlidharan)
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