Mumbai, March 8: Jet Airways shares rose by around 10 percent in Friday’s trade at the Bombay Stock Exchange (BSE) on the back of reports that the Abu Dhabi-based Etihad Airways was in the final stages of investing in the company.
A report by business TV channel CNBC TV-18 said the Middle East-based passenger carrier may directly buy 10-12 percent from the promoters of Jet Airways and may buy a similar stake through preferential shares.
The two airlines are negotiating a stake sale agreement involving the sale of 24 percent in Jet Airways to Etihad. However, the deal has been delayed due to investment protection and management control issues.
The company’s scrip at the BSE closed 9.93 percent – or 50.05 points up – at Rs.554.10 per share from its previous close of Rs.504.05. Talk of a possible stake sale has been doing the rounds for quite some time now, ever since the government allowed foreign airlines to pick up 49 percent shares in domestic carriers.
Jet-Etihad Airways concluded a deal Feb 27 to acquire three Jet Airways slots at London airport for $70 million.
“Purchase is part of a sale and lease back agreement. Jet Airways will continue to operate flights to London utilising these slots,” Etihad had said in a statement then.
Etihad chief executive James Hogan had said Feb 4 that only after due diligence on the deal was complete that a final proposal would be put before the board of the passenger carrier.
In February, Hogan and Jet Airways’ chairman Naresh Goel led a joint delegation of both the airlines and separately met Finance Minister P. Chidambaram, Civil Aviation Minister Ajit Singh and Commerce Minister Anand Sharma to appraise them about a possible stake sale deal.
Last year, the government allowed foreign airlines to invest up to 49 percent in private domestic carriers.
Foreign carriers were not allowed to directly invest in Indian carriers for security reasons although 49 percent FDI by non-airline players was allowed.
The Indian civil aviation sector has been going through a tough operating environment as high fuel and interest costs have hurt it.
The government expects that the decision will help bring in more funds to the airlines that have been cold-shouldered by banks.