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Two linked international airlines that have been financially faltering showed signs on Friday they might be on the brink of serious distress.
India’s Jet Airways and the United Arab Emirates’ Etihad Airways are close partners. Etihad, owned by the government of Abu Dhabi, has a 24% stake in Jet Airways, although there have been reports that it may be looking to sell its shares as it deals with its own problems.
According to a Reuters report, Jet Airways is missing payments on some of its leased aircraft. To ease tensions over the late payments, the airline has been holding talks with its creditors, which include some of the biggest aviation leasing firms in the world, but the negotiations are not said to be going well. One person with knowledge of the talks told Reuters about an “ill-tempered showdown,” in which the firms threatened to take back their planes.
“Jet has been delinquent for many months,” the person said. “Nobody wants to get in a situation where the problems worsen and it becomes even more difficult to take out aircraft.”
Jet Airways has been hanging by a financial thread for a while now. In 2018, the airline was in at least $1.2 billion USD in debt, and reportedly told its employees that drastic measures were needed in order to keep the airline running — mainly cost-cutting measures like slashing payroll and simplifying its fleet.
Etihad, too, has been making a months-long effort to cut costs in order to shore up its balance sheets. Last October, the Abu Dhabi-based carrier scrapped one of its two daily A380 frequencies to JFK. That is in addition to the airline cutting premium offerings, temporarily suspending US routes and even permanently canceling some (San Francisco and Dallas).
On Friday, Etihad canceled an order for 10 Airbus A320neos. It’s also cutting 50 pilot jobs, about 2.4% of its total flight crew, by the end of January, according to Skift.
The cutbacks are likely set to continue for Etihad. The airline’s vice present for flight operations, Sulaiman Yaqoobi, sent a letter to employees saying due to the “extremely challenging” global economy and shrinking capacity, Etihad must trim at least 10% off its total operating costs.
Featured image by Alberto Riva/TPG.
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