Dubai: Following months of talks, Etihad Airways said on Wednesday, it will acquire 24 per cent stake in India’s Jet Airways for $379 million.
The Abu Dhabi-based carrier said in a statement that the strategic investment with a $600 million commitment from Etihad Airways will help further strengthen Jet Airways financial position. It will also translate to passenger benefits with expanded codesharing, creating a combined network of 140 destinations.
As a part of the alliance, 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.
A win-win deal for both the airlines, while Jet Airways will be able to open direct access to a global network for passengers from 23 cities in India, the proposed codeshare expansion will broadly enable Etihad Airways to tap into India’s rapidly growing travel market. And Jet Airways will establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East.
Etihad Airways President and CEO, James Hogan, said in a statement that the deal is expected to bring immediate revenue growth and cost synergy opportunities, “with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years”.
“The Indian market is fundamental to our business model of organic growth partnerships and equity investments,” he said. Jet Airways Chairman, Naresh Goyal, added that the transaction further strengthens the balance sheet of Jet Airways and underpins future revenue streams, “which will accelerate our return to sustainable profitability and liquidity”.
“For Jet, this is terrific news. They are now part of the most effective hybrid alliance there is. Etihad will bring latest technologies and business practices to Jet. Provided Jet is able to keep out the state’s meddling it can be a great deal,” said analyst Addison Schonland, founder and partner at AirInsight.
This story was updated at 11.02am on April 25.
