New Delhi/Mumbai: Abu Dhabi-based Etihad Airways is close to picking up 24% stake in Jet Airways in a deal valuing Rs 1,500-1,800 crore. The deal is expected to be concluded in ten days, top civil aviation functionary said today.
Etihad's investment in Jet will be the first in this sector which was opened for foreign airlines last year. The deal size of Rs 1,500-1,800 crore means Etihad paying 25-50% premium over Jet's Wednesday stock price depending at what price the 24% stake is sold. Jet's current market capitalisation is little over Rs 5,000 crore.
Naresh Goyal owns 80% in the airline through Isle of Man registered Tail Winds Ltd and the rest is held by individual and institutional investors. It is not yet clear how the deal is being structured. Although earlier reports indicated that the airline will issue fresh equity amounting to 24%. The government rules restrict foreign investment in airlines at 49%.
The deal will help Etihad and its hub Abu Dhabi counter the dominance of Dubai which is the largest airport in the region. Abu Dhabi is connected with 119 weekly flights from India while Dubai has 352 weekly flights to India. Only about 35% of the traffic between India and Dubai/Abu Dhabi is origin-destination traffic and the balance is onward or transit traffic.
02/01/13 Business Standard
