Shares of Jet Airways plunged as much as 13.6 per cent in intra-day trade on Monday on reports that talks with Abu Dhabi’s Etihad Airways have run into rough weather. The scrip, however, recovered later to end the day at Rs 559.15, down 2.70 per cent, on the BSE.

About 27 lakh shares changed hands on the BSE on Monday against the two-week average quantity of 8.32 lakh.

When contacted, Jet Airways' spokesperson said the information was incorrect and speculative.

Advantage Etihad

Industry experts say Etihad’s interest in seeking management control in Jet Airways was likely to be the bone of contention in the deal coming through. “The deal is essential for Jet Airways. Etihad would have an upper hand in this deal,” said Jasdeep Walia, aviation analyst, Kotak Institutional Equities Research.

Etihad is governed by a board of directors under the chairmanship of Sheikh Hamed bin Zayed Al Nahyan. If the deal gets through, this would be the first since India allowed foreign carriers to buy up to 49 per cent in domestic carriers, which are struggling with stiff competition and high operating costs.

According to reports, Etihad board is likely to meet on March 22 to discuss the said deal.

Currently, promoters hold 80 per cent stake in the company. While foreign institutional investors have an exposure of 4.27 per cent, domestic instutitions, including LIC, hold 4.08 per cent equity in the company. Retail investors holding stands at about 5 per cent.

Stock of Jet Airways had nearly doubled in value in the past 11 months to reach a high of Rs 622.10 in January. While in the first three weeks of February, the shares slumped over nine per cent, it recovered marginally by 4.3 per cent in March.

In a recent report, the Centre for Asia Pacific Aviation had said Etihad was expected to acquire 24 per cent stake in Jet Airways, which could result in an inflow of $330 million into the Indian airline. The report valued Jet Airways at $1.3-1.4 billion (about Rs 7,000 crore). The current market cap of Jet Airways is about Rs 4,827 crore.

The airline posted a net profit of Rs 85 crore for the quarter ended December 31, 2012, against a net loss of Rs 101 crore in the corresponding period last year.

Total income from operations rose nearly seven per cent to Rs 4,206 crore in the third quarter, from Rs 3,939 crore in the year-ago period.

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