Etihad agrees to come to the rescue of India’s Jet Airways
ETIHAD Airways has agreed to lead a rescue of cash-strapped Jet Airways India in a move that will see the Abu Dhabi-based carrier double its stake to 49 percent, according to television reports.
Etihad is in talks to lift its holding from the current 24 percent, India’s BTVI channel reported yesterday, citing unidentified people familiar with the matter. CNBC-TV18 said that Jet founder Naresh Goyal’s stake could drop to 20 percent from 51 percent, and that he’ll stand down as chairperson.
Shares of Jet Airways closed 16 percent 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 immediately respond to requests for comment, though it said in a filing earlier that it had made no decision requiring a stock-market disclosure. People with knowledge of the matter said last week that the airline was seeking funds from investors, including Etihad.
The deal, if it goes through, will give the third-biggest Middle East carrier more say over Jet’s operations and its day-to-day management, with Goyal’s voting rights capped at 10 percent, BTVI said. Indian regulations cap airline ownership by foreign operators at 49 percent, and also prohibit them from taking control. Etihad, which lost $3.5 billion (R48.31bn) over two years, last week scrapped orders for 10 Airbus SE A320neo aircraft and revealed plans to cut 50 pilot posts this month. | Bloomberg