The first investment by a foreign carrier in an Indian airline could be on the anvil with Jet Airways on Thursday announcing it was in talks with Abu Dhabi-based carrier Etihad for a possible stake sale.
“These discussions have commenced recently pursuant to the liberalised FDI policy which permitted foreign investment in the shares of an Indian airline,” Jet Airways informed the Bombay Stock Exchange.
“The discussions are in progress but no terms have been firmed up at present. Various structures are being explored by the legal and commercial teams,” it said in its filing.
Following the statement, shares of Jet Airways rose sharply by about seven per cent to Rs 618.70.
Both airlines are learnt to have appointed global consultants as they want the investments to be on a sound footing, given the high operating costs in India, with reports saying the Gulf carrier’s Board would meet soon to decide on the matter.
Jet said it had not yet sought any regulatory approval as a deal with Etihad was still to be firmed up. An appropriate announcement would be made upon finalisation of the terms of the investment with Etihad as per legal and regulatory requirements, the BSE filing added.
Few weeks ago, Etihad had said it “has identified equity investments in other airlines as an important evolution of its successful partnership strategy.”
“Such investments will be made where Etihad Airways believes the commercial prospects are strong, where there are like-minded business philosophies, and where such commitment will be welcomed. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements,” the Gulf carrier said.
Etihad has in the past two years picked up stakes in several international carriers like Virgin Australia, AirBerlin, Air Seychelles and Aer Lingus.
The Jet statement also said that no time-line could be set for arriving at an agreement “considering the complexity of transnational transactions such as this, and the complexity of the legal requirements of the regulatory structure.”
Jet’s clarification came after reports that Etihad may buy 24 per cent stake for about Rs 1,800 crore. Similar reports have also appeared about Etihad being in talks for potential investment in Kingfisher Airlines.
Sources said that apart from stake sale, Jet and Etihad are expected to have a marketing agreement along with sharing of some flying slots under the air traffic rights.
—-PTI