The board of Abu Dhabi-based Etihad Airways is expected to meet next week to take a call on its investment in Indian private carrier Jet Airways. The Gulf carrier is expected to pick up 24% stake in Jet for about R1,600-1,800 crore, a government official said, adding that the deal can be sealed in the next 10-12 days.
The statement assumes significance because this makes Jet as the front-runner for investments by Etihad. It was widely speculated that the Vijay Mallya's Kingfisher Airlines was also in the race for investments by the same airline.
If the deal happens it would be the first after the government in September permitted foreign airlines to pick up to 49% in a domestic airline.
The official also said that for the deal to go through Jet would have to approach the Foreign Investment Promotion Board (FIPB) to change its shareholding pattern. Jet chairman Naresh Goyal holds 80% stake in the carrier through an overseas corporate body (OCB), Tail Winds, which is registered in the Isle of Man. The remaining stake is held by public shareholders.
Before the deal, the airline will have to transfer Tail Winds holding to the London-based non-resident Indian (NRI) Goyal as the government already allows 100% investment by NRIs.
Though the OCB investment is considered a foreign investment, Jet was exempted from the norm so far. However, for the Etihad's entry, the carrier will have to transfer Tail Winds' holding to himself as an NRI, the government source said.
Etihad and Jet have already signed a code-sharing agreement. On Wednesday Jet's share prices rose 0.47% to close at R579.60 on the Bombay Stock Exchange.