Etihad interested in Jet Airways

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Jet Airways Plane
A Jet Airways plane ready for take off. Photo-Rick Schlamp

Indian carrier Jet Airways has confirmed the growing media speculation that Abu Dhabi’s Etihad Airways is negotiating a stake sale in the airline.

In a communique to stock exchanges, the airline said: “Jet and Etihad are in a discussion regarding a potential investment by the latter in the former, these discussions have commenced recently pursuant to the liberalised FDI policy which permitted foreign investment in the shares of an Indian airline. The discussions are in progress but no terms have been firmed up at present.”

Initial reports suggest that Etihad Airways could possibly buy a 24 percent stake in Indian carrier Jet Airways for up to USD 330 million. A statement by the Jet Airways reports that the deal is expected to be finalized within ten days after completion of discussions between legal and commercial teams of both carriers. A final decision in this regard is awaited from the board of Etihad and Abu Dhabi’s state-owned investment fund Mubadala.

Etihad has been actively making acquisitions all around the world to enhance its status in the airline industry. Recently, the airline also purchased a 40 percent stake in Air Seychelles and increased its holding in airberlin to 29.21 percent in 2011. The Abu Dhabi-based airline also owns a 10 percent stake in Virgin Australia and around 3 percent of Ireland’s Aer Lingus.

In India, it had also been previously linked to the struggling Kingfisher Airlines. However, Kingfisher’s debts of an estimated USD 2.5 billion have scared away potential investors. The airline was grounded in October last year and has now also lost its operating license. Till November last year, Jet Airways had accumulated debts of about USD 600 million.

Gulf-based carriers have shown great interest in the Indian aviation market after its government passed a legislation to allow foreign airlines to invest in the Indian domestic civil aviation industry. By buying a stake in Jet Airways, Etihad would strengthen its position against Dubai-based Emirates Airline in India. Currently, 119 weekly flights connect Abu Dhabi and India, compared to 352 weekly flights to Dubai.

Etihad and Jet Airways already enjoy a code-sharing agreement and could pose stiff competition for other carriers in the domestic market. Increasing competition in the aviation market is also expected to benefit flyers as they hunt for better cheaper deals and convenience.

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