Jet shares fall after Etihad says revising deal

NEW DELHI Mon Feb 18, 2013 5:13pm IST

1 of 2. 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) - Shares in Jet Airways(JET.NS) ended down 7.65 percent on Monday, a day after the chairman of Etihad Airways said the Abu Dhabi-based carrier needed to revise the terms of a pending deal to buy a stake in the Indian airline.

Etihad Chairman Sheikh Hamed bin Zayed al-Nahayan told Reuters on Sunday it was too soon to say when a final agreement between the two carriers would be struck.

The deal would be the first since India relaxed ownership rules in September and allowed foreign carriers to buy up to 49 percent in local carriers, which are battling stiff competition and high operating costs.

Jet shares have more than doubled in value in the past 10 months to reach a high of 647.80 rupees on January 28. But in the past three weeks they have slumped as much as 11 percent as the companies struggled to seal an agreement.

Finding a way around Jet's complicated shareholding pattern and having a significant say in Jet's board decisions could be Etihad's concerns, said Rajan Mehra, an industry expert and the India head of U.S.-based private jet operator Universal Aviation.

The founder of Jet is likely to convert shares owned by its holding company into his personal stake to comply with foreign investment regulations, an Indian government source has said.

Tail Winds Ltd, the Isle of Man-based investment vehicle of Jet founder Naresh Goyal, currently holds 79.99 percent of Jet Airways. According to Indian rules, foreign companies can hold a maximum 49 percent stake in local carriers, but so-called non-resident Indians like Goyal are exempted.

As a foreign company, Tail Winds cannot engage in share trades with another foreign company but Goyal can sell his personal stake.

Indian media reports have said Etihad is seeking half the seats on Jet's board and a say in appointing the chief executive, potentially running foul of foreign investment rules that require a majority of airline board members to be Indians.

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

A Jet spokeswoman did not immediately respond to a request for comment.

(Reporting by Anurag Kotoky and Manoj Dharra; Editing by Stephen Coates)

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

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

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