Jet Etihad Presentation

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It presents how Jet and Etihad can come together and benefit its shareholders and customers and improve its effciency and performance.It also signifies the challenges to the deal.

Transcript of Jet Etihad Presentation

  • To Co-Pilot

  • Aviation Sector In India

  • opened for Foreign Airlines

  • Impact of FDI on Aviation Industry

    AirlinesGovernmentPassengersThe move is expected to provide much-needed cash flow to private airlinesImplementing the proposal will mean likely political opposition from the Trinamool CongressFares may become competitiveIt is likely to result in an improvement in technology, both in terms of ground handling and flight operationsAmbitions of Indian airports to emerge as international hubs would be undermined because foreign airline investors will want to divert the passenger traffic to their own hubs abroadQuality of service may go up due to competitionIt will bring in the best international management practicesSecurity is another concern. The government will have to keep a tab on dubious investors entering India through this routeBetter international connectivityThere are also fears that this may lead to a takeover of Indian carriersSince FDI rules not applicable to Air India, it will lose its market share

  • FDI impact on Jet15th September, 2012 - Announcement to allow Foreign Airlines to invest in Domestic Airlines(49% FDI)19th September, 2012 - Jet Airways and Etihad Airways are in discussions for a possible deal that could see the Middle-Eastern carrier pick up a minority stake in Jet

  • Comparison of Financials

    ParticularsJet AirwaysEtihad AirwaysRevenues3.1 billion4.8 billionNet Income / (Loss)(89 million)42 millionEBITDAR393 million753 millionSeat Factor78.80%78.20%Passengers16.85 million10.2 million

  • Jet-Etihad vis-a-vis

  • Valuation Multiples

    Peer GroupEnterprise ValueEV / EBITDA(in USD thousands)LTMFY 1Jet Airways Ltd.3,137,4659.55x9.59xAir Asia BHD4,813,2047.90x7.51xAir Arabia1,432,5407.90x6.86xJazeera Airways891,7908.31x7.83xAlaska Air Group Inc.3,718,9533.99x3.84xJetBlue Airways Corp.3,894,5985.66x5.24xGOL Linhas Aereas Inc.2,875,9578.26x6.90xSpiceJet Ltd.497,03010.31x10.11x

  • Change in Shareholding Pattern

  • Stock Price Movements

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  • WinWin Situation

  • Benefits To Be Derived

    Jet AirwaysEtihadThe 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 600 million but will have access to cheap loans @3% from Abu DhabiTo 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. Jets 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 Jets 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.

  • Synergies to be Derived

  • The Making Of A Giant

  • Take off Turbulences

  • Many clauses changed in pact, but Mideast carrier retains edge

    SEBI Inclusion

    Etihad has to maintain a minimum 15% shareholding at all times. This change is intended to align Etihad's power to appoint three directors with its shareholdingThe nominations committee also has the exclusive authority to appointment independents and the CEO, according to the shareholders agreement. The committee will have five members, with Jet and Etihad nominating one person each. The three other members will be independent directors, who will be appointed by the board.

  • Thank You.!