Etihad in talks to hike stake in loss-hit Jet Airways
22 Nov 2018
Gulf carrier Etihad is looking at increasing its stake in financially troubled Jet Airways, raising its current 24 per cent within the permissible limit of 49 per cent for foreign direct investment.
The move comes after domestic group Tatas proposed to buy stake in the beleaguered airlines.
Etihad can increase its stake in Jet Airways by another 25 per cent to take it up to 49 per cent - the foreign direct investment cap for foreign airlines in a domestic carrier.
The Naresh Goyal-led Jet Airways has once again started negotiations with its joint venture partner Etihad Airways for a possible bailout, possibly, allowing the Gulf carrier to increase its stake in the venture.
Jet is also reportedly looking at selling part of its 49 per cent stake in its loyalty programme, Jet Privilege, to Etihad, reports said, adding that a meeting between Jet Airways founder-chairman Goyal and the top management of the West Asian carrier has been planned abroad.
Jet Airways on Tuesday said it is in active discussions with several investors, including Tata Sons, to secure sustainable financing to tide over the current stress that is holding back growth.
“We are in active discussions with various investors to secure sustainable financing to navigate through the current headwinds and create long-term growth. There is interest in our strong brand and confidence in business turnaround efforts,” Vinay Dube, chief executive officer, said in a newsletter to its stakeholders.
The explanation follows the buzz created by the Tata Group carrying out a due-diligence on Jet Airways.
Tata Group, which already owns stakes in two airlines, on Friday informed that it is interested in buying a stake in the full-service carrier, but no proposal has been made so far.
Last week, Jet announced its Q2 results for FY 2019 with a net loss of Rs1,261 crore. “The tough operating environment for the aviation industry continues to impact us. However, the company’s efforts to reduce costs have been reflecting on their business, which has yielded over Rs500 crore of savings in the first half of FY2019.” Dube added.
The Naresh Goyal-led airline announced that it has added 18 additional frequencies on domestic and international routes to meet growing demand from travellers along with new services to Singapore via its hubs in Mumbai, Delhi and Bengaluru.
The airline also announced plans to add increase frequencies on select destinations such as Bangkok, Kathmandu, Singapore, Doha, Dubai, in view of the growing demand.
“Jet Airways will take delivery of another six new Boeing 737 MAX aircraft this fiscal and will leverage the same for better cost efficiency,” Dube said.