Finance puzzles: Etihad cuts jobs, Jet Airways planes at stake
After cutting an order of ten aircraft from Airbus, Etihad now axes dozens of jobs to aid its troubled finances. Meanwhile, another airline in which the Gulf carrier has notable investment - India’s Jet Airways - is trying to solve its own financial puzzles to stay afloat.
Etihad cutting dozens of pilot jobs
As part of an ongoing effort to battle huge financial losses and stay afloat, Etihad is cutting 50 pilot jobs, it emerged on January 10, 2019. In a letter to employees it was noted that 2.4% flight crew jobs are being cut by the end of January 2019 to reflect the airline’s declining capacity, Bloomberg reports. Etihad reported a $2 billion loss in 2016 and a further $1.5 billion in 2017.
The news comes just as it emerged that the Gulf carrier has scrapped an order for ten A320neos, as Airbus' latest orderbook revision revealed. The planes were supposed to go to Air Serbia, in which Etihad has a 49% stake. The order was made back in 2013 and delivery dates were set between November 2018 and 2020.
In July 2018, Etihad renewed partnership with Air Serbia, after their five year management agreement, signed in 2013, expired. The UAE airline retained its 49% stake, but withdrew the management team appointed to manage the Serbian airline (including Air Serbia’s CEO and COO) starting from 2019.
In December 2018, Air Serbia announced plans to launch new routes in the summer of 2019. This would be the airline’s first network expansion in two years, and its 49% shareholder should play a “significant role” in the matter, in terms of providing necessary equipment, EX-YU aviation reported at the time.
Jet Airways at risk to lose planes
The situation is intense for Jet Airways. The airline is believed to be in dire need of cash, reportedly having just enough to last another month. It is already late on payments to its staff, lessors and vendors. The latest blow for the airline comes from its aircraft lessors, who are reportedly considering to take back planes, Reuters reported on January 11, 2019.
Etihad has a 24% stake in the Indian airline. The two were engaged in rescue talks in December 2018, the Gulf Times reported at the time. However, now it is understood that the talks have stalled, presumably over Etihad’s demand related to the company’s leadership change. Jet Airways is now looking into option to engage in talks with India’s Tata group conglomerate, Bloomberg reports quoting people with knowledge of the matter.
The Gulf carriers position on the matter remains unclear, however, Reuters report quotes a person familiar with Etihad’s position, stating that the company is not “in any position to sink new equity into Jet at this juncture”.
Etihad is still dealing with problems from its other failed investments. Insolvency administrator of now dismantled Air Berlin sued the Gulf carrier for $2.3 billion in damages December 2018. The Gulf carrier is preparing for a legal battle against the claim, as it finds it to be “without merit”, according to a spokesperson quoted by Arabian Business.
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