Dubai:
Etihad Airways said on Wednesday it will acquire 24 per cent stake in India’s Jet Airways for $379 million (Dh1.39 billion), following months of talks.
The Indian carrier said on Wednesday in a regulatory filing that it has agreed to sell 27.26 million shares to Etihad Airways at 754.74 rupees (Dh51.16) per equity share, adding that the deal is subject to shareholders and regulatory approvals.
The deal is the first since the Indian government relaxed ownership rules in September last year, allowing foreign carriers to buy up to 49 per cent in local carriers.
“The value of this equity investment is $379 million and will result in Etihad holding 24 per cent of the enlarged share capital of Jet Airways,” Etihad said in a statement.
It added that wider overall commitment to Jet Airways includes the injection of $220 million to create and strengthen a wide-ranging partnership between the two carriers. And $150 million will be invested by Etihad by way of a majority equity investment in Jet Airways’ frequent flyer programme ‘Jet Privilege’, subject to regulatory and corporate approvals, and final commercial agreements expected to be completed within the next six months.
Etihad paid $70 million in February to purchase Jet’s three pairs of Heathrow slots.
“Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi,” Etihad said in the statement, adding that Jet Airways will establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East, directly connecting passengers from 23 Indian cities in India to global network.
Commenting on the deal, analyst Peter Morris, chief economist at aviation consultancy, Ascend, told Gulf News: “Jet Airways is probably the nearest thing that India has to a stable and competitive national carrier, and for Etihad this co-operation / share ownership will bring Indian market benefits that will not then be available to other Gulf competitors.”
Andrew Charlton of Aviation Advocacy, says, the move is consistent with the strategy of Etihad, which currently has equity stakes in a number of carriers including Air Berlin, Aer Lingus, Air Seychelles and Virgin Australia.