Abu Dhabi-based Etihad Airways, which has a 24% equity stake in cash-strapped Jet Airways, is looking to raise its stake to up to 49%, the maximum a foreign airline can hold as per the foreign direct investment rules for the aviation sector.
Sources in the know of developments told FE that Etihad has also zeroed in on a local Indian partner, which will also pick equity in Jet Airways so that in alliance it can dilute Jet’s promoter chairman Naresh Goyal’s 51% stake to have some sort of management control in the airline. The FDI guidelines also stipulate that the management control of an airline having foreign investment should vest in Indian partners.
“Etihad has zeroed in on a local business partner and it is a person who is more aligned to the West Asian interests,” said a source aware of the development. In response to an FE query, Jet Airways Spokesperson said, “In line with its policy, Jet Airways does not comment on speculation.” Etihad’s spokesperson did not respond to the query till the time of going to the press.
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Etihad bought a 24% stake in Jet Airways for Rs 2,060 crore in May 2013. In October, Etihad had pumped in $35 million as a pre-purchase payment for Jet’s flying miles programme — JetPrivilege — in which it holds a majority stake of 51%, giving succour to Jet which is struggling to run operations due to a financial crunch.
Jet Airways is also in discussion with the Tatas for a possible share-swap agreement but the deal is not moving fast enough and the airline is in need of immediate cash as it needs money to meet its operational commitments, its lease payments, its salary dues as it has not paid a certain section of its employees, including the pilots.
As on September 2018, Jet Airways has a debt of Rs 8,411 crore and of this, Rs 1,968 crore is aircraft-related debt. The airline has Rs 10,878 crore in accumulated losses and is currently working on a turnaround plan to save Rs 2,000 crore over a couple of years through several initiatives the board has adopted.