After weeks of hype, the first confirmation of Jet Airways selling a stake to the Abu Dhabi national carrier Etihad came on Thursday. An Etihad delegation, which included Chief Executive Officer James Hogan, and promoter of Jet Airways Naresh Goyal called on Civil Aviation Minister Ajit Singh and thereafter met with Commerce and Industry Minister Anand Sharma.
On Friday, the delegation is expected to meet Finance Minister P. Chidambaram. The deal will need the nod of the Foreign Investment Promotion Board, which is under the Finance Ministry.
May acquire 24% stake
While the contours of the deal have not yet been made public, the Centre for Asia Pacific Aviation, in a report released on Thursday, said Etihad is expected to acquire a 24 per cent stake in Jet Airways which could result in an inflow of up to $330 million into the airline. The report puts the valuation of Jet Airways at $1.3-1.4 billion (about Rs 7,000 crore).
“The investment is expected to take place through the issue of preferential shares and warrants. At a later stage, Etihad’s stake could be increased to 49 per cent at which time the de-listing of Jet Airways may be an option as the promoters may find a private structure to be more suitable,” the report adds.
Earlier, speaking to newspersons after the meeting with Eithad, Ajit Singh said: “Jet and Etihad have been in consultations for quite some time now. They are discussing the details. All that the Government is doing is to make sure the agreement is is within the regulatory framework.”
Asked when the deal is likely to be signed, the Minister said “that is up to them”. The Minister also declined to talk about the value of the deal or what percentage of stake Jet is likely to sell.
‘Enabling’ policy
The Commerce Minister assured the delegation that the foreign direct investment policy in civil aviation was an “enabling” one. Incidentally, Sharma is scheduled to visit Abu Dhabi for two days beginning February 17. While the agenda for his visit has not been finalised, it is expected to give a positive push to the proposed deal between Jet and Etihad.
Sources indicate that after the deal is through, Jet Airways may set up a hub in Abu Dhabi and route flights to the US from there. They say that Etihad is likely to seek and get an equal representation on the reconstituted board. An Indian is expected to be appointed CEO of the airline.
The high profile meetings with government officials come a day before the Jet board meets in Mumbai to consider the third quarter results. Jet Airways’ stock closed 4.34 per cent higher at Rs 622.10 on the Bombay Stock Exchange on Thursday.