Etihad buys 24pc Jet Airways stake for $379m
Mumbai, April 24, 2013
Abu Dhabi's Etihad Airways confirmed it had taken a 24 per cent minority stake in India's Jet Airways for $379 million.
The Gulf carrier said in an emailed statement it would subscribe to 27.3 million new shares at 754.74 rupees per share.
Jet said in a brief statement to the stock exchange earlier on Wednesday that its board had approved the allotment to Etihad.
Etihad, which is on an aggressive expansion drive, will also make a $150 million equity investment in Jet's frequent flyer programme and spend $70 million to buy Jet's three pairs of Heathrow slots through the sale and leaseback agreement announced in February.
Jet's majority ownership will remain with Indian nationals and Jet's founder and non-executive chairman Naresh Goyal will hold 51 percent of the airline after the deal, which is subject to shareholder approval, the statement added.
As part of the deal Jet will establish a hub in Abu Dhabi and expand its reach through Etihad Airways' global network.-
Hogan said: "We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines."
"It is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years," said the airline chief.
“The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world,” he stated.
“We look forward to collaborating with Jet Airways and constructively working together with them and their stakeholders to build a sustainable, competitive and profitable airline,” he added.
A key component of the wide-ranging partnership is expanded codesharing on flights with passengers benefiting from reciprocal ‘earn-and-burn’ rights on the airlines’ frequent flyer programs.
The proposed codeshare expansion will significantly enable Etihad to tap into India’s rapidly growing travel market, providing additional passenger traffic to its Middle Eastern, North American and European destinations, and give Jet Airways passengers from various cities access to an expanded network.
Commenting on the deal, Goyal said: "I am extremely happy to be in a partnership with an airline that shares our customer-centric operational philosophy and ethos. This partnership with Etihad is a win-win situation for all our stakeholders, especially our guests, who will now have access to a much expanded global network."
“This transaction further strengthens the balance sheet of Jet Airways and, more importantly, underpins future revenue streams, which will accelerate our return to sustainable profitability and liquidity,” he added.-Reuters and TradeArabia News Service