The Naresh Goyal-promoted Jet Airways and media-baron Kalanithi Maran-backed SpiceJet are in talks with foreign carriers Etihad Airways and AirAsia to sell minority stakes, government officials confirmed on Monday.
While SpiceJet is said to be in preliminary stages of talks, the deal between Jet and Abu Dhabi’s Etihad Airways could be completed first. “The talks are on and it is more or less final,” a government source told FE.
“It may take around a month and half.”
Shares of both airlines soared on Monday after reports of stake sale talks. Jet Airways’ shares closed 10.81% higher on the BSE at R560.40 while SpiceJet’s shares ended the day 12.98% higher at R44.40 after reaching a 52-week high of R46.85 during intra-day trade.
“We are aware that recently there has been much speculation in the press,” said Jet Airways in a statement to the BSE. “The company cannot comment on such speculative reports.”
Over the weekend, an investment-focused website reported Jet Airways has finalised a deal to sell 25% stake to Etihad for $400 million which would value the airline at $1.2 billion.
The valuation could not be independently confirmed by FE. However, sources in the know of the development told FE that global audit and consultancy firm Ernst & Young was consulting Jet on the deal. Meanwhile, SpiceJet informed the BSE that reports of a stake sale were pre-mature but investors are interested.
“Although few investors have evinced interest in the company post the Government allowing FDI in civil aviation, it will be very pre-mature to comment on the prospect of any fresh equity issuance to such interested parties or confirm/deny names of any specific entity,” said the airline in a statement.
Last week, FE reported that Kalanithi Maran and wife Kavery Kalanithi had stepped down from the board of the airline’s holding company Kal Airways.
Reacting to the news, Sun Group CFO S L Narayanan said that the airline would need capital for expansion but denied plans of a stake sale. “We certainly need funds for fleet expansion and whenever there is an attractive opportunity (for partial stake sale), we will look at it. But as of now, there is nothing on the cards,” Narayanan told a news agency.
Both SpiceJet and Jet Airways slipped back into losses during the second quarter of fiscal 2012-13 after a profitable first quarter. SpiceJet had a net loss of R163.52 crore while Jet Airways posted a net loss of R99.67 crore. Jet Airways has a much larger debt burden of R12,600 crore while SpiceJet’s total debt stands at around R1,280 crore.