By 27 February, 2013

Jet Airways has divested its three parking slots at London’s Heathrow Airport to Etihad Airways for $70 million (Rs 380 crore), in what is seen as a first leg of the impending deal where the Abu Dhabi-based airlines would pick a significant minority stake in the carrier promoted by Naresh Goyal.

The purchase is part of a sale-and-lease-back agreement signed between the two airlines which will allow Jet to continue to operate flights to London utilising these slots, Etihad has said in a statement. The deal further strengthens the existing commercial relationship, which came into effect in July 2008, making provision for code-sharing between the two airlines.

Etihad Airways also said, “As previously advised, Etihad Airways continues to progress in discussions about further investment in Jet Airways.”

Sources told VCCircle that the two-tiered deal, which was supposed to be signed by February 19, would conclude by March 21.

Jet Airways scrip shot up over 19 per cent to close at Rs 534.85 a share on the BSE in a strong Mumbai market on Wednesday.

Earlier, Jet scrip had gone on a tailspin over apprehensions related to delay in the impending deal with Etihad.

A source privy to the development, said, “Naresh Goyal was in Dubai to sort out the minor issues in the transaction. They are now waiting for the FIPB approval which will be coming in soon. Etihad was pushing for a larger stake and that’s why the deal got delayed, but the Jet promoter has made it very clear that they will not give away majority stake in the company.”

This will be among the first set of deals where a foreign carrier will acquire stake in a domestic carrier. The Indian government opened up the domestic aviation sector in September last year, allowing foreign carriers to pick as much as 49 per cent stake in domestic airlines.

Malaysia’s AirAsia has already announced a partnership with the Tata Group and another Indian industrialist to enter the domestic airlines business. AirAsia already operates international flights to and from India to South-east Asia.

Also read:

Etihad will pick 24% in Jet for $375M, may have more board nominees than Naresh Goyal

 

(Edited by Sanghamitra Mandal)

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