Etihad seeks 26%, board seat in Jet

Tags: News

Deal likely by Jan, size pegged around Rs 1,200 cr

Jet Airways is set to sell 25 per cent stake to Etihad Airways, though the latter continues to press for 26 per cent and representation on Jet’s board. The deal is likely to be closed in a month.

A civil aviation ministry official on condition of anonymity said, “It is more or less confirmed that Etihad will pick up 25 per cent.”

The stock price on Monday moved up by five per cent to close at Rs 556. Jet’s market cap stood at Rs 4,799 crore. So a fourth of it will be Rs 1,200 crore.

Financial Chronicle could not independently verify the value of the deal. “Consultants are working on it, and would complete their work in a week’s time.” If a final deal is struck as per the initial understanding, Etihad may not have a representative on the board of Jet Airways.

When contacted by Financial Chronicle, a senior Jet Airways official who requested anonymity said talks were on with other carriers to maximise the premium over the market price. But he made it clear that “no deal has been finalised yet. Both the percentage stake to be sold and the premium to the market price remain to be agreed upon.”

“Once the deal is done, we will inform the stock exchanges and seek the shareholders’ as the law requires,” he said.

S P Tulsian, an independent analyst, said that should the deal happen, it would mean good times for Indian aviation as whole, given that the airline has a debt of Rs 14,000 crore. He said that European and American companies wo-uld not bid for Indian carriers as they themselves are cash-strapped.

“So more carriers from West Asia and Southeast Asia would be seen bidding in the sector,” Tulsian added.

The ministry official quoted earlier said, “Following a conclusion of the deal, Jet’s overseas hub in Brussels may be shifted to Abu Dhabi for making the operations more cost-effective, given the huge presence of Etihad there.”

On corporate restructuring of Jet Airways in the event of a deal, he said, “It is too early to speculate on that.”

Etihad, which has expanded globally through stake purchases in Air Berlin and Virgin Australia, has been looking at extending its geographical reach to India and other Asian markets. The national airline of the United Arab Emirates, which started flying in 2003, carried 8.3 million passengers in 2011.

From its hub at Abu Dhabi International Airport, Etihad serves 86 passenger and cargo destinations in West Asia, Africa, Europe, Asia, Australia and the Americas with a fleet of 68 Airbus and Boeing aircraft. Over 90 more aircraft are on firm order, including 10 A380s, the world’s largest passenger aircraft. Etihad also holds equity in Air Seychelles and Aer Lingus.

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