ACCORDING to a source within India's Ministry of Civil Aviation, Jet Airways is set to sell 24 per cent of its stake to Etihad Airways in a deal valued at Rs1,600 crore (US$292.2 million) and expected to close by March 2013.
The deal follows reports speculating that the airlines would enter such an arrangement. Jet Airways and Etihad Airways, already in a codesharing agreement, are expected to share technical know-how and slots as part of the deal. The sale will also allow Jet Airways to optimise the use of its 100-strong fleet.
“The deal will help Etihad Airways extend its reach in India and infuse liquidity in Jet Airways. The new entity will also pose stiff competition to other major players operating in the Middle Eastern market, including Air India and Emirates,” said Arun Anand, managing director, Midtown Travels.
In September, the Indian government began allowing foreign carriers to buy stakes of up to 49 per cent in Indian carriers. The move is welcome relief to Indian airlines, which have been bleeding because of high operating costs.
Etihad Airways acquired a four per cent stake in Virgin Australia for close to US$35.6 million in June, and had raised its stake in Air Berlin to 30 per cent in the past. It has also bought a 40 per cent share in Air Seychelles.