Abu Dhabi-based Etihad Airways has confirmed it is going to take a stake in Jet Airways of India, ending weeks of speculation a couple of possible deal.
Etihad said the move would allow it to take a larger foothold within the growing Indian market.
It follows a sequence of equity investments all over the world from the ambitious carrier, with Etihad also having taken stakes in Aer Lingus, Seychelles Airways, airberlin, and Virgin Australia.
The latest $379 million investment is the primary by an overseas operator in an Indian airline since ownership rules were relaxed.
The government initiative was designed to give carriers in India with deep-pocketed global partners.
Following the deal Jet is probably going to profit from strategic expertise, cheap financing and possible fuel import benefits as well as the capital injection.
“The deal is predicted to bring immediate revenue growth and price synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over a better five years,” said James Hogan, Etihad chief executive.
Etihad will buy 27.3 million new shares of Jet at 754.74 rupees per share, a 31.7 per cent premium to Jet’s closing share price on Tuesday, and obtain 24 per cent of Jet’s expanded share capital.
Etihad can even invest one other $150 million in Jet’s frequent flyer program and spend $70 million to shop for Jet’s three pairs of Heathrow slots in the course of the sale and leaseback agreement announced in February.
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