Blackstone Group to reportedly invest in Jet Airways
Private equity firm Blackstone Group LP is reportedly in talks to buy a stake in the loyalty programme of Jet Airways. The stock has responded positively by nearly 8 percent in the hope that Jet Airways can be revived from what looked like a certain crash landing.
The last time when Jet was in financial trouble, Naresh Goyal sold a 24 percent stake in the airline. This time he is selling a stake in Jet Privilege Pvt Ltd, which is valued at Rs 3,000-4,000 crore. However, media reports say that the deal is contingent on Jet securing funding for the airline operations.
The 2017-18 annual report of Jet Airways points out that Jet Privilege membership has grown by 30 percent to 8 million. Its financial results are also robust. Jet Airways posted a consolidated profit of Rs 1,499 crore in FY17 and a loss of Rs 636.45 crore in FY18. Jet Privilege, on the other hand, posted a profit of Rs 106.63 crore in FY17 and a profit of Rs 177.35 crore in FY18. While Jet Airways posted a flat topline, Jet Privileges saw its income grow at nearly 16 percent to Rs 622.24 crore.
The numbers show that Jet Privilege is sheltered from the volatilities of the airline industry which is exposed to the fluctuations of oil prices and exchange rates.
Through the loyalty programme, frequent flyers acquire what is called air miles within Jet Airways or other partner airlines. The main partners of such programmes are banks, credit cards providers, car rental companies, hotels, and retailers.