November 20, 2013
Abu Dhabi-based Etihad Airways has finalized a deal to purchase a 24% stake in Jet Airways, marking the completion of the first cross border transaction in the Indian aviation sector since last year’s change to the country’s ownership laws.
The confirmation of the nearly $330 million deal comes after all necessary regulatory approvals were obtained by both airlines from Indian authorities on Nov. 12. The two sides closed the transaction on Nov. 20.
Under a strategic equity alliance signed in April, the Middle East carrier will subscribe to 27.3 million new shares of Jet Airways at 754.74 rupees ($13.92) per share, an spokesman for the Indian carrier says.
Etihad’s overall commitment to Jet also includes $220 million of fresh capital to create and strengthen a wide-ranging partnership between the two carriers.
Etihad also paid $70 million to purchase Jet’s three pairs of slots at London Heathrow Airport through a sale-leaseback agreement announced earlier this year. The slots are currently being utilized by Jet to operate London services.
Majority ownership of Jet Airways will remain with Indian nationals and Naresh Goyal, Jet’s founder and non-executive chairman.
The transaction also calls for Jet to establish a gateway in Abu Dhabi, and expand its reach through Etihad’s network.
“The infusion of foreign direct investment in the aviation sector will result in economies of scale, grow traffic at our airports, and create job opportunities, says Goyal.
He says the partnership between the two airlines will “commence immediately” with a view to “enhance connectivity for tourists, business travelers and Indian families.