Etihad reaches deal to rescue Jet, may raise stake: report
REVIVAL BID Founder Naresh Goyal’s stake may fall to 20% from 51%, and he may be asked to stand down as chairman
LONDON: Etihad Airways PJSC has agreed to lead a rescue of cash-strapped Jet Airways (India) Ltd in a move that will see the Abu Dhabi-based carrier double its stake to 49%, according to television reports.
Etihad is in talks to lift its holding from the current 24%, India’s BTVI channel reported on Monday, citing unidentified people familiar with the matter. CNBC-TV18 said Jet founder Naresh Goyal’s stake could drop to 20% from 51%, and that he’ll stand down as chairman.
Shares of Jet Airways closed 16% higher in Mumbai, where it is based. The company ranks as India’s biggest full-service airline, but has failed to post a profit in nine of the past 11 fiscal years. Cash is running short as fare wars depress revenue and turbulent oil prices increase costs.
An increase in Etihad’s Jet stake would come at a time when the Persian Gulf carrier is cutting thousands of jobs and shrinking its fleet amid mounting losses from over-expansion and failed investments.
India remains an attractive prospect because of the size of its travel market and the pace of growth.
Etihad said in an email that it does not comment on rumour or speculation.
Jet didn’t i mmediatel y respond to requests for comment, though it said in a filing
THE DEAL WILL GIVE ETIHAD MORE SAY OVER JET’S DAY-TO-DAY MANAGEMENT, WITH GOYAL’S VOTING RIGHTS CAPPED AT 10 %
earlier that it had made no decision requiring a stock-market disclosure. People with knowledge of the matter said last week that the airline is seeking funds from investors including Etihad.
The deal, if it goes through, will give the third-biggest Mideast carrier more say over Jet’s operations and its day-to-day management, with Goyal’s voting rights capped at 10 %, BTVI said. Indian regulations cap airline ownership by foreign operators at 49%, and also prohibit them from taking control.
Etihad, which lost $3.5 billion o v e r t wo y e a r s , l a s t week scrapped orders for 10 Airbus S E A3 2 0 n e o a i r c r a f t a n d revealed plans to cut 50 pilot posts this month.
Chief executive officer Tony Douglas has put the brakes on a costly bid to challenge bigger Gulf rivals Emirates and Qatar Airways, saying he’ll focus more on local needs rather than carrying passengers between continents.