Etihad is set to gain the most if it strikes a deal with Naresh Goyal's Jet Airways and not with Vijay Mallya's Kingfisher Airlines (KFA), says aviation experts. They say that even though Etihad will gain a minority stake in Jet Airways, it will benefit immensely by the vast market share that the Indian carrier enjoys in the industry.
"The Abu Dhabi based Etihad Airways will be in a win-win situation since Jet Airways is in the running despite the losses and still enjoys a massive 24% market share in the domestic market in India," said an industry expert requesting anonymity.
Analysts suggested that even though the almost defunct Kingfisher Airlines offers 49% shareholding which will give a substantial amount of management control to the Middle-Eastern airline, the deal will cost Etihad a lot of work as it will have to start from the scratch.
"KFA is reeling under a debt of Rs 8,000 cr and has accumulated losses of over Rs 10,000 cr. Its operating licence has been suspended till the time it does not submit a comprehensive revival plan. If Etihad enters into a deal with this carrier, it will have to infuse Rs 3,000 cr and will get a considerable part of the debt as liabilities," said Jitendra Bhargava, an aviation expert.
The cash strapped carrier reported a net loss of Rs 754 cr in the second quarter of the current calendar year and has negligible market share due to frequent strikes and cancellations of flights.
On the other hand, the deal with Goyal's Jet Airways is valued between Rs 1,600 cr and Rs 2,200 cr. The deal includes a 65% premium from its current price has been demanded by Jet Airways. This, in turn means that the Gulf carrier Etihad Airways will have to shell out close to Rs 1,634 cr in order to gain a 24% stake in the company.
The immediate benefit that Etihad derives from the deal, if it is sealed, is the expansion of bilateral capacity, which allows it to get more Indian passengers in Abu Dhabi.
"Under the current system of bilateral capacity, Etihad's rivals Emirates and Qatar Airways are granted more capacity and frequencies into India thanks to the Organisation and Destination targeting system. With this deal, Etihad can leverage the vast network that the domestic carrier enjoys," said aviation expert Vinay Bhaskara.
No comments:
Post a Comment