Dubai: India’s Jet Airways may be about to purchase 50 Boeing 737s, Bloomberg reported on Tuesday, raising speculation that Etihad Airways could be behind the deal.
Two months ago Etihad announced at the Dubai Airshow it was ordering 10 Airbus 320s, a single aisle aircraft much like the Boeing 737. But a few days later, it was revealed that the order was for Air Serbia, in which Etihad holds a 49 per cent stake. Etihad simply used its buying power to negotiate a better deal for its equity partner. And in Jet Airways it has 24 per cent stake.
The 737 order, valued at $2.5 billion (Dh9.19 billion), could help Jet Airways fend off looming competition from East Asia with Singapore Airlines and Air Asia planning their own India-based carriers.
Etihad did not respond to a request for comment on its involvement in the Jet Airways Boeing order.
But last week James Hogan, President and CEO of Etihad, told Gulf News that the airline will work with its equity stake partners to negotiate the best deal possible on aircraft orders.
“We work behind the scenes on purchasing and procurement of fleet, shared expenses and look at sustainable profitability,” he said.
Details of the $2.5 billion Boeing order comes as Indian media reported on Tuesday that the Securities and Exchange Board of India (Sebi) will take another look at the deal between Etihad and Jet Airways that saw a $325 million capital injection into the Indian carrier in exchange for the minority holding.
The deal had been subject to Indian cabinet and other regulatory approvals due to stringent foreign investment laws. But in November the airlines announced it had received “all requires Indian regulatory approval”.
The latest review has been prompted by observations by the Competition Commission of India (CCI) over the control of Jet Airways.
Hogan, and Etihad Chief Financial Officer James Rigney, both took seats on the Jet Airways board following the approval in November, which is so far the largest foreign investment in India’s aviation sector.
The agreement includes a code-share partnership between Etihad and Jet Airways and ultimately gives Etihad access to the highly government protected Indian market. It now flies to 26 Indian cities with its code-share partner and in March Etihad will launch a new Abu Dhabi-New York service that will be taken over by Jet Airways in May.
Etihad also received an additional 36,000 seats on the highly lucrative UAE-Indian routes last year.
In November, Jet Airways Chairman Naresh Goyal stated that India’s aviation sector would see a trickle-down effect from the tie-up. “The infusion of foreign direct investment in the aviation sector will result in economies of scale, grow traffic at our airports, and create job opportunities,” he stated.
Jet Airways did not respond to an emailed request for comment.
The Sebi review comes nine months after the deal was first announced in April last year. Etihad had placed a July 31 2013 deadline on the deal, which was later pushed back to August that year until it dragged to what the two airlines believed in November was final regulatory approval.
Sebi and CCI did not respond to phone and emailed requests for comment.