TIE UP BETWEEN JET-ETIHAD AIRWAYS

THE PRESENTERS: - Bhavneet (47) Sujatha (48) Rajat Omar (49) Mohit Banka (50) Garima Bansal (51) Nitish Bhardwaj (52) Prashant (52) Vinay Singhla (54)

MOHIT

AVIATION INTRODUCTION

Aviation as an infrastructure segment.

Aviation sector does not only provide air transport.

About one-third of world trade (by value) is delivered by air and about half of international tourism is facilitated by air links.

Civil aviation industry is an important engine for innovation and technological progress in a world of decreasing barriers to trade.

INDIAN AVIATION INDUSTRY

1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth from Karachi to Bombay as part of the first Tata Sons Ltd. flight to deliver mail carried by British Imperial Airways.

1948: Govt. of India acquires 49% stake in Tata Airlines, designates it a flag carrier and renames it “Air India International (AII)”.

1953: Tata Group sells majority stake in AII to the Government of India, nationalizing air transport.

1953: Indian Airlines formed by merging 8 former independent domestic airlines.

1960: USA and India are connected for the first time with an Indian airline.

1990: East West Airlines becomes the 1st private airline since 1953

MARKET SIZE Total domestic passengers carried by

the scheduled domestic airlines between January and April 2013 were 20.289 million, revealed the official statistics.

No-frill carrier Indigo lead in terms of market share with 29.8 per cent of the pie, followed by Jet Airways-JetLite combine at 22.6 per cent, Spice Jet 19.6 per cent, Air India Domestic 19.2 and Go Air at 8.9 per cent for the January-April 2013 period.

The air transport (including air freight) in India has attracted foreign direct investment (FDI) worth US$ 449.26 million from April 2000 to march 2013, as per the data released by Department of Industrial Policy and Promotion (DIPP).

DOMESTIC AIRLINES Air India GoAir Airlines IndiGo Airlines Jet Airways Jet Airways Konnect SpiceJet Airlines JetLite (Air Sahara) MDLR [Murli Dhar Lakh Ram (MDLR) Group]

Airlines* Jagson Airline* Paramount Airways*

*Small Privately Owned Airline(s)

NAMRATA

KEY DEVELOPMENT & INVESTMENT

Jet Airways is in talks with Abu Dhabi-based Etihad Airways.

Jet Airways offering visa procurement services.

The Rajiv Gandhi International Airport in Hyderabad is set to commence ‘visa on arrival’ facility.

FDI IN AVIATION SECTOR So far foreign investors in aviation

sector were allowed to invest up to 49% stake in domestic airline companies but the criteria for the investment was that the investor should not be related to the aviation sector.

However, now with relaxed FDI norms, foreign aviation companies are open for the investment in domestic Indian aviation companies with up to 49% stake

BENEFITS It will provide the much needed cash flow to the

domestic aviation companies.

It will bring in investments in aviation technology.

It will improve the flight operation, ground handling, evolved safety standards and overall better aviation experience.

Consumers will have wider choice.

International aviation companies will bring the best management practice so that the operations are taken place effectively.

WHY NOT ALLOW FORIEGN AIRLNES TO FULLY OWN

INDIAN CARRIERS? India does not have an open skies

policy so it signs liberal Air Services Agreement (ASA).

If FDI by foreign airlines is allowed upto 74% many global airlines will want to set up subsidiary companies in India

Two investors-Ethiad of Abu dhabi and Air Asia of Malaysia would rethink their entire Indian stratergy.

BHAVNEET

INTRODUCTION TO JET AIRWAYS

JET AIRWAYS Incorporated on April 1, 1992. Commenced operations on May 5, 1993. Granted scheduled airline status on January 4, 1995. 12 April 2007 Jet Airways bought Air Sahara for $340

million later renamed JetLite. Jetkonnect launched on May 8, 2009. Total number of aircrafts 98. March 2004: Began international operations with

inaugural flight from Chennai to Colombo. Currently Operations: 50 Domestic destinations and

20 International destinations. On April 24, 2013, announced a 24% stake sale to

Etihad at $379 million.

CHAIRMAN’S PROFILE

MR.NARESH GOYAL

MARKET SHARE

SUJATA

ETIHAD AIRWAYS

SNAPSHOT

ETIHAD AIRWAYS Set up by Royal (Amiri) Decree in July

2003. Commercial operations in November 2003. Etihad has a fleet of 66 aircraft serving 87

destinations in 55 countries. Chairman - HH Sheikh Hamed bin Zayed Al

Nahyan Chief Operating Officer and President -

James Hogan

CHAIRMAN HH Sheikh Hamed bin Zayed Al

Nahyan

NETWORK MAP

RAJAT

PRODUCTS & SERVICES

JET AIRWAYS ETIHAD AIRWAYS

SERVICES

ON GROU

ND SERVI

CE

JET SPARK

IN FLIGH

T EXPERIENCE

JET KIDSJET

MOBILE

JET ESCAP

ES

JET AIRWA

S KONNECT

CARGO

JET MALL

SERVICES

DIAMOND

FIRST CLASS

PEARL BUSINESS

CLASS

CORAL ECONOMY

CLASSIN FLIGH

T ENTERTAINMENT

DUTY FREE

ETIHAD

CHEUFFUER SERVICESS

ETIHAD

EXPRESS

COACH

SERVICES

ETIHAD

GUEST

CARGO

CODESHARE PARTNERS

JET AIRWAYS ETIHAD AIRWAYS

CODESHARE

AMERICAN

AIRLINE

ETIHAD

QANTAS

AIR CANA

DA

EMIRATESSOUTH

AFRICAN

AIRLINE

ALL NIPPO

N

THALYS

JET KONNECT

ALITALIA

UNITED

AIRLINES

CODESHARE

AIRBERLIN

AIR ASTAN

A

AIR FRANC

E

AIR LINGUS

ANAAIR

MALTA

AIR SEYCHELLES

ALITALIA

BRUSELLS

AIRLINE

SAFI AIRWAY

S

JET AND ETIHAD AIRWAYS

JET AIRWAYS-ETIHAD STRATEGIC ALLIANCE

Strategic alliance with Etihad Airways of the United Arab Emirates.

The injection of US$750 million covering up to 24% of Jet Airways’ Share Capital & other parts through bonds & equity.

Expansion of existing operations and introduction of new routes between India and Abu Dhabi.

Conviniene to customers.

VINAY

WHAT LED TO THE DEAL?

INDIA – UAE Bilateral Agreement (Aviation)

Agreement Validity – 3 yrs. Indian population in the Gulf region Saudi Arabia, UAE

and their neighbors. 51.97% of Gulf populations is Indian.

More seats allocation to the Indians in India-Gulf Route. Lower Fares and Special Offers to Frequent Flyers. Allow designated airlines of each side to have the option

to change the aircraft in the territory of the other party.

BENEFITS TO BE DERIVED

Jet Airways EtihadThe deal is life saver for Jet, with a huge debt of Rs.13,282 crore in the fiscal ended March, 2012. It will not only get USD 750 million but will have access to cheap loans @3% from Abu Dhabi

To push the deal through, the Indian Govt. agreed (by way of bilateral agreement with UAE) to give Etihad permission to fly to 11 more cities in India in addition to 9 it already lands.

Jet’s consolidated Net Debt-Equity=97 times. The equity infusion will allow Jet to pay down the debt & will lead t its Debt-Equity falling to 4.3 times. It will result in int. Saving of Rs.190-200 crore per year.

Etihad may cannibalise the traffic share of Indian airlines by flying passengers to various parts of the world through its hub airport in Abu Dhabi.

Key cost benefits and synergies in fleet acquisitions, maintenance, joint purchasing opportunities for fuel, spare parts and insurance and technology support will come through. Other areas of cooperation include joint training of pilots, cabin crew, and engineers and consolidation of Jet’s loyalty program me.

Much needed entrance in Indian market with the potential market and steady growth. Also the number of seats to be increase three times between India & UAE.

NITISH

SYNERGIES TO BE DERIVED

FACTS & FIGURES

MAJOR CONCERN OF SEBI & FIPB

Consent of 3/4th of members majority

for decision.

The agreement has unilateral right and

can be terminated by Etihad any time.

The jet airways headquarters will be

shifted to Abu Dhabi.

Tax Evasive Measure.

PRASHANT

IMPACT ON ECONOMY,STOCK MARKET & VARIOUS OTHER AREAS

Indians working in U.A.E

Lead to the growth of Aviation Sector.

Generation of employment.

Will push the stock of all the airlines upward.

It would ease the pressure of high current

account deficit in long run.

TAKE-OFF TROUBLES April 24 Jet and Etihad sign strategic alliance. The latter agrees to buy a 24% stake in the former

for about Rs 2,060 crore 

May 24 Jet shareholders approve stake sale. The airline defers resolution to amend the company’s articles of association 

May 27 The two airlines amend shareholder agreement to address shareholder and Sebi concerns on ‘control’ and ‘ownership’ 

May 29 & 31 Subramanian Swamy and Jaswant Singh write to the PM against the deal 

June 13 PMO writes to the civil aviation ministry to redraft the Cabinet note on Abu Dhabi traffic rights 

June 14 Foreign Investment Promotion Board defers approval to Jet-Etihad alliance 

July 2 PMO defends the Abu Dhabi bilaterals and says there’s no division within the government on the issue

SOLUTIONS BoD Composition: 2 Directors for Etihad with Jets 5

and 7 Independent Directors of Indian origin. Audit Committee member reduced to 1 for Etihad. Board Decisions to be taken on 2/3rd majority rather

than 3/4th as first drafted. No change in the Shareholding pattern. Etihad

acquire 24% stake leaving 51% with Goyal and remaining 25% with others, including institutions and individuals.

Goyal will be designated as the First Chairman of the airline after Etihad's investment is approved by the Indian Authorities.

Etihad has agreed not to act in concert with Naresh Goyal, while taking decisions.

Thank You….!