Jet Airways expects deal with Etihad in a week: executive

NEW DELHI Thu Jan 31, 2013 3:01pm IST

A Jet Airways aircraft waits for take off on the tarmac at the airport in Mumbai September 13, 2009. REUTERS/Punit Paranjpe/Files

A Jet Airways aircraft waits for take off on the tarmac at the airport in Mumbai September 13, 2009.

Credit: Reuters/Punit Paranjpe/Files

Stocks

   

NEW DELHI (Reuters) - Jet Airways(JET.NS) expects to finalise a stake sale deal with Abu Dhabi's Etihad Airways in a week or so, an executive at the airline, who declined to be named, said on Thursday.

The Civil Aviation Minister Ajit Singh said earlier on Thursday, after meeting the top executives of the two airlines, that Etihad was in talks with Jet for a potential investment in the carrier.

The terms of the possible deal have not been disclosed, but a government source said earlier this month Etihad was in talks to pick up a 24 percent stake in Jet for up to $330 million.

"The government's role is to make sure that whatever agreement they come to is within the regulatory framework," Singh told reporters after the meeting, declining to give details of the deal.

Top executives at the two airlines are in the Indian capital to meet the civil aviation and trade ministers and senior officials.

Separately, an official at India's trade ministry, who declined to be named as he was not authorised to speak to the media, said Etihad would soon apply to India's foreign investment approval authority for investing in Jet.

The Jet deal, if closed, will be the first since India relaxed ownership rules in September last year and allowed foreign carriers to buy up to 49 percent in domestic carriers that are battling stiff competition and high operating costs.

The aviation sector has been abuzz with talks of stake sales to global carriers since the ownership rules were eased.

But investment bankers don't expect a slew of foreign carriers striking deals in Asia's third-largest economy due to worries about the sector's billions of dollars of debt and high costs of operations.

Jet shares rose as much as 3.4 percent during the day on Thursday to 614.80 rupees. The stock has nearly doubled in the last three months on speculation about the stake sale talks with Etihad.

Etihad's deal with Jet made operational sense, analysts have said, as both carriers already have a codeshare pact allowing them to rapidly ramp up the number of flights on lucrative Gulf-India routes and challenging Dubai-based Emirates Airline.

Nearly 1.5 million Indians work in the United Arab Emirates, which include Abu Dhabi and Dubai, and millions more work in Saudi Arabia, Oman, Bahrain and Kuwait.

The deal with Etihad also gives Jet cash to pare some of its debt. The investment will also put it on stronger footing to compete with state-owned Air India Ltd on domestic routes that feed into the flights to and from the Gulf.

(Reporting by Anurag Kotoky; Writing by Sumeet Chatterjee)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Political Pulse

Political Pulse

100 days of Modi: Good for business, not so good for marginalised groups.  Full Article 

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Best Economy

Best Economy

Swiss economy most competitive once again; EU, U.S., Japan improve.  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage