Etihad Airways to buy 24% in Jet Airways for Rs2,061 crore
24 Apr 2013
Etihad Airways today agreed to buy a minority 24 per cent stake in Naresh Goyal-run Jet Airways for around $379 million (Rs2,061 crore), the first investment by an overseas airline in an Indian carrier.
The deal comes after the Indian government eased foreign investment rules in aviation industry by allowing foreign carriers to buy up to 49 per cent in domestic airlines.
The deal also comes two months after Etihad agreed to buy three pairs of Jet Airways slots at London's Heathrow airport, for $70 million. (See: Etihad acquires Jet Airways' slots at London's Heathrow airport ahead of stake buy)
In a brief statement to the stock exchange, Jet Airways said its board approved the allotment of 27.3 million shares at Rs754.74 each on a preferential basis to Etihad Airways.
The price represents a 31.7 per cent premium to Jet Airway's closing share price on Tuesday, and the deal values India's second-largest carrier at $1.7 billion (Rs9,246 crore).
Indian carriers, hamstrung by high cost of operation, including fuel costs, have been facing severe competition from foreign operators, especially from Gulf-based carriers.
While talk of possible stake sale has been doing the rounds for the last five months, Jet Airways shares have soared by about 70 per cent since November.
Etihad, the national airline of the UAE and the third-biggest carrier in the Gulf, has a fleet of 57 Airbus and Boeing aircraft and operates close to 1,000 flights a week to 67 destinations in 45 countries, carrying 8.3 million passengers annually.
The Abu Dhabi-based airline, which reported its first full-year net profit in 2011 of $14 million, has recently been acquiring minority stakes in rival carriers in order to expand its network across Europe, Asia and Africa.
It has acquired a 29.21 per cent stake in Europe's sixth largest airline Air Berlin, 40 per cent in Air Seychelles, nearly 3 per cent in Aer Lingus, and 10 per cent in Richard Branson's Virgin Australia.
Based in Mumbai and with an international hub at Brussels Airport, Jet Airways operates over 400 flights daily to 76 destinations worldwide.