Indian carrier Jet becomes first to benefit from country’s eased ownership rules
Etihad Airways at Washington Dulles Airport. Etihad / Etihad Media Centre
Indian airlines have much to gain from the global equity alliances, as do foreign carriers like Etihad that gain an early foothold in India’s quickly expanding aviation market.
Etihad Airways PJSC and Jet Airways (India) Ltd. moved closer to an investment deal that will make the Gulf carrier the first foreign operator to buy into a local airline after ownership rules were eased in September.
“The discussions were very good,” Etihad Chief Executive Officer James Hogan told reporters in New Delhi after meeting India’s Aviation Minister Ajit Singh along with Jet Chairman Naresh Goyal. A stake sale to Etihad may conclude within a week, a Jet official said, asking not to be identified citing company policy.
The executives later told trade minister Anand Sharma that the airlines will soon seek government approval for the deal, a ministry official said, asking not to be identified as the talks were private. Abu Dhabi-based Etihad’s stake purchase comes as airlines in Asia’s third-largest economy seek global equity alliances to raise funds needed to pay for expansion.
Jet rose 4.5 percent in Mumbai, the most in more than a week, to 621.30 rupees. The stock more than tripled last year. Kingfisher Airlines Ltd., the grounded carrier that was also in talks with Etihad for funds, rose 1.2 percent while discount carrier SpiceJet Ltd. gained 2.7 percent.
Etihad, the Middle East’s third-largest airline, is in talks to buy 24 percent of Jet for about 16 billion rupees ($300 million), an Indian government official said in December. Jet Chairman Goyal today declined to say when the deal will conclude or how much stake the carrier is selling to Etihad.
A stake in Jet will help Etihad tap into one of the fastest-growing aviation markets in the world where air travel is forecast to triple by 2021. Prime Minister Manmohan Singh’s government in September allowed foreign carriers to buy as much as 49 percent of local airlines.
State-owned Etihad has invested in smaller operators to help feed long-haul flights and turn its home emirate into a hub for intercontinental travel. It has a 29 percent holding in Air Berlin Plc and also owns stakes in Air Seychelles Ltd., Virgin Australia Holdings Ltd. and Aer Lingus Group Plc.
Jet, which had 116 aircraft, including Boeing Co. and Airbus SAS planes as of Sept. 30, is selling and leasing back planes to free up cash and repay $600 million of its $2.3 billion debt by March 31.
The carrier posted losses for six of the last seven quarters because of high fuel and airport charges. It will report earnings for the quarter ended Dec. 31 tomorrow.
“It’s a very good move that Jet and Etihad are talking,” aviation minister Singh said after meeting with the airline executives. “The aviation sector should grow and competition should also grow.”
Editors: Vipin V. Nair and Arijit Ghos.
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