Jet Airways to raise $300m in loans with Etihad aid

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Jet Airways is seeking $300 million in loans and tapping on strategic partner Etihad Airways for assistance.

A source close to the discussions told Flightglobal Pro that Jet will be raising $150 million through its own direct approaches to debt markets, while Etihad will "facilitate through their banking circles" a further $150 million in external commercial loans.

The loans, which are subject to approval from the Reserve Bank of India, will be secured against Jet's assets. The proceeds will be used to retire Indian rupee denominated debts, hence reducing its interest costs, the source adds.

In April, Jet's board approved a plan to sell a 24% stake in the company to Etihad, which will see the Abu Dhabi carrier invest $379 million into the company, subject to regulatory approvals. The two carriers will then enter into an extensive alliance, in which Jet will use Abu Dhabi as a major gateway hub to the Middle East.

In addition, Etihad also paid $70 million to buy three pairs of slots at London Heathrow airport in a sale and leaseback transaction. It has also committed to pay $150 million for a half-share in the airline's Jet Privilege loyalty programme.

Jet Airways recorded a net profit of Rs931 million ($17.3 million) for the quarter ended 31 December 2012.