Etihad Buys Jet Airways Stake For $379m

Abu Dhabi’s Etihad Airways confirmed it has taken a 24 per cent minority stake in India’s Jet Airways for $379 million.

The Gulf carrier said in an emailed statement it would subscribe to 27.3 million new shares at 754.74 rupees per share.

Jet said in a brief statement to the stock exchange earlier on Wednesday that its board had approved the allotment to Etihad.

Etihad, which is on an aggressive expansion drive, will also make a $150 million equity investment in Jet’s frequent flyer programme and spend $70 million to buy Jet’s three pairs of Heathrow slots through the sale and leaseback agreement announced in February.

Jet’s majority ownership will remain with Indian nationals and Jet’s founder and non-executive chairman Naresh Goyal will hold 51 per cent of the airline after the deal, which is subject to shareholder approval, the statement added.

As part of the deal Jet will establish a hub in Abu Dhabi and expand its reach through Etihad Airways’ global network.

The investment is the first by a foreign carrier into an Indian airline since the country relaxed ownership rules in September and allowed foreign carriers to buy up to 49 per cent in local carriers, which are battling stiff competition and high operating costs.

The deal would give Etihad a bigger foothold in India, a fast-growing but challenging market, and provide Jet with cash to retire debt and give it a partner with global expertise.

“It’s a game-changing opportunity for Etihad, and a game-changing opportunity for India,” Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA), told Reuters.

Kaul said Jet would benefit from strategic expertise, cheap financing and possible fuel import benefits in addition to the capital injection.

Etihad has negotiated stake purchases in four foreign airlines including Air Berlin, Virgin Australia, Aer Lingus and Air Seychelles.

The airline is expanding quickly as it looks to compete with regional rivals Emirates and Qatar Airways.