Abu Dhabi-based Etihad Airways moved a step closer to picking up a 24 per cent stake in domestic carrier Jet Airways with the top officials of both airlines meeting Civil Aviation Minister Ajit Singh and the Commerce and Industry Minister Anand Sharma in anticipation of a deal being clinched soon.
It is learnt that both Etihad and Jet are likely to apply to the Foreign Investment Promotion Board (FIPB) for seeking clearance for Etihad’s proposal to pick up 24 per cent stake in Jet Airways. The Etihad delegation was led by its CEO James Hogan, and Jet Airways promoter Naresh Goyal represented the domestic carrier.
Talking to reporters after meeting the officials of Etihad and Jet, Civil Aviation Minister Ajit Singh said the Etihad delegation was here today [Thursday] and both parties had been in the consultation process for quite some time. “They are discussing details with Jet Airways. Any foreign airline investing money has a number of concerns — what’s the policy, what’s the cost structure so that you make money out of that. They have been discussing this deal for over a month,” he said.
Anand Sharma briefed
Mr. Singh said whatever the deal was struck between the two entities, they should be within the regulatory framework. “Once they sign the agreement, they will go through the regulatory requirements. Unless the deal is signed and approved, we can’ say it is done. But I don’t see any problem,” he added.
The officials of the two airlines also met Union Commerce and Industry Minister Anand Sharma and briefed him on their plans following the government’s decision last September to allow foreign carriers to invest in their Indian counterparts.
“We have put in place an enabling policy, and any investment under the policy is welcome,” Mr. Sharma told the delegation. Mr. Sharma would be visiting Abu Dhabi during mid-February to attend the first meeting of the India-UAE high-level task force on investment.
Speculation had been in the air for quite a while on Etihad trying to secure a stake in Jet Airways. A meeting of the Jet Airways’ board is slated in Mumbai on Friday to take a formal decision on the issue. Etihad is likely to buy 24 per cent equity in Jet Airways valued at about Rs.1,800 crore. If the deal is carried through, it would be the first investment by a foreign carrier in an Indian airline.
Aviation experts said apart from expanding the equity base of the Indian carrier, a major reason for Mr. Goyal to dilute part of his shareholding in Jet from 80 per cent had been the FIPB order to bring it down to regulatory levels.
Jet Airways has an equity base of 8.63 crore shares, valued at Rs.5,370 crore. The shares of Jet Airways closed at Rs.622.10 on the BSE on Thursday.