Jet Airways said on Thursday that it is in talks with Etihad Airways wherein the Abu Dhabi-based airlines could invest in the second largest Indian carrier. It added, however, that no terms have been finalised as yet.
This is the first time Jet Airways has officially confirmed an impending deal with Etihad.
VCCircle had first reported in November 23 that Jet Airways and Etihad were in active negotiations for a deal valued around $400 million wherein the foreign carrier could pick around 24 per cent of Jet Airways, through a preferential allotment.
The deal value could be lower if the transaction also involves some stake sale by the promoter Naresh Goyal, who owns around 80 per cent in the firm.
The deal will also allow Goyal to cut his holding to conform to the public listing norm, which makes it mandatory for all listed firms to have at least 25 per cent stake with the public. This criterion has to be met by June 2013.
Jet Airways’ scrip rose 6.5 per cent in intra-day trades before closing at Rs 606.85 a share on the Bombay Stock Exchange, up 4.7 per cent in a strong Mumbai market on Thursday.
This will be the first such stake acquisition by a foreign airline after the Indian government opened up the aviation sector in September, allowing foreign carriers to pick as much as 49 per cent stake in domestic airlines.
“Various structures are being explored by the legal and commercial teams and care being taken to ensure that all the Indian regulatory requirements are fully complied with,” according to a disclosure by Jet Airways.
The company added, “By its very nature, there cannot, at this stage, be a firm time line as to the progress of these negotiations, considering the complexity of trans-national transactions such as this, and the complexity of the legal requirements of the regulatory structure.”
Etihad spokesperson had earlier told VCCircle, “The Indian aviation industry offers tremendous potential, with significant passenger movement on domestic and international sectors. Etihad Airways has identified equity investments in other airlines as an important evolution of its successful partnership strategy. Such investments will be made where Etihad Airways believes the commercial prospects are strong, where there are like-minded business philosophies, and where such commitment will be welcomed. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements."
Other media reports have speculated that Etihad is also in simultaneous talks with debt laden Kingfisher Airlines, which is currently grounded.
(Edited by Prem Udayabahnau)