You are here: Home » Companies » News
Business Standard

Debt-ridden Jet Airways sells loyalty miles to raise Rs 250 crore

'This amount will help to run the operations'

Aviation  |  Jet Airways

Aneesh Phadnis  |  Mumbai 

Jet Airways
Jet Airways has secured Rs 250 crore from advance sale of redemption miles to its associate firm. The airline is also in discussion with lenders for short-term loans. The board of Jet Privilege Private Limited (JPPL), the company managing the loyalty programme, approved the transaction on Tuesday.

The airline has also received Rs 250 crore as interim funding from promoter Naresh Goyal, who is negotiating a resolution plan with its strategic partner Etihad Airways and lenders. Banks are expected to convert debt into equity and infuse fresh capital in the airline, which is facing a serious cash crunch and has defaulted on payments to lessors, vendors and staff salaries. A senior executive from a public sector bank said consortium leader (State Bank of India) is likely to extend Rs 200 crore as an immediate financial assistance. “This amount will help to run the operations. A clear picture will emerge in the middle of the next week,” he said.

Goyal is expected to step down as the airline’s chairman and negotiations are underway on issues like board composition and rights, governance mechanisms. A due diligence of the airline is underway.

JPPL is co-owned by Etihad and Jet. Etihad is a majority owner of the company and it holds 50.5 per cent stake. Last October, too, the airline had sold redemption miles for the full year to JPPL to earn Rs 250 crore. An another transaction was proposed to enable the airline to raise cash urgently and pay all its dues. “Etihad wanted certain conditions met and those were approved,” a source said. 

“Similar to what was done in October 2018, JPPL concluded a second Prepaid Ticket Purchase agreement, for USD 35 Mn, with Jet Airways, which is in the normal course of business," a Jet Airways spokesperson said.

One of the conditions which has been agreed upon by Jet management is to open the JetPrivilege loyalty programme to other carriers.JPPL sells miles to Jet Airways, its partner airlines, banks and hotels among others. However it can not sell miles to any other airline which is not a partner of Jet Airways because of an exclusivity clause. Now  the exclusivity has been waived which could potentially allow JPPL to bring in other airlines as partners or even manage their loyalty programmes. 

Accrual and redemption of miles is a transaction between Jet Airways and JPPL. While Jet Airways pays JPPL for accrual of miles, it gets paid by JPPL on redemption of those miles by a customer. The redemption cost is agreed on a per mile basis and is settled every month. In October Jet Airways had sold redemption miles for $ 35 million which amounts to an entire year's sale.



What you get on Business Standard Premium?

  • icon Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • icon Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • icon Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
  • icon Pick your 5 favourite companies, get a daily email with all news updates on them.
  • icon 26 years of website archives.
  • icon Preferential invites to Business Standard events.


Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, February 07 2019. 01:30 IST