eap

Jet Airways fails to pay interest to Etihad-linked entity

An entity set up to finance affiliates of Etihad Airways said Jet Airways India has become the third carrier in the group to fall behind on interest payments. EA Partners I, a vehicle created in 2015 to allow Etihad to provide funds to airlines in which it owned stakes, said in a statement that the Indian carrier failed to make a payment on March 19 on account of "temporary liquidity constraints." Etihad set up two vehicles, EA Partners I and II, which sold $1.2b of bonds to raise funds for several airlines. The structure was designed to provide financing for the airlines while minimizing the burden on the balance sheet of their Abu Dhabi-based parent company. The airlines each guarantee as much as 20% of the bonds, making regular contributions into a cash pool from which coupons are paid to investors who bought the securities. EA Partners I’s $700m of bonds maturing in September 2020 have been trading at about 40% below face value after two other airlines in the group, Air Berlin and Alitalia, started insolvency proceedings in 2017. Etihad owns a 24% stake in Jet Airways.<br/>