Abu Dhabi/Mumbai: Etihad Airways PJSC needs to revise its deal to buy a stake in India’s Jet Airways (India) Ltd, and it is too soon to say when a final agreement will be struck, the Abu Dhabi airline’s chairman said on Sunday.
Sheikh Hamed bin Zayed al-Nahyan, speaking on the sidelines of a defence exhibition in the United Arab Emirates (UAE) capital, said officials will meet Indian trade minister Anand Sharma to discuss the deal.
Asked if a Jet deal would be signed by March or April, Sheikh Hamed said, “I don’t know...we need to revise it.”
The terms of the possible deal have not been disclosed, but a government official said earlier this month that Etihad was in talks to pick up a 24% stake in Jet Airways for up to $330 million (around Rs.1,780 crore).
Asked if a Jet deal would be finalised soon, Sheikh Hamed said, “It’s too early to decide.”
Sheikh Hamed, who is also managing director of sovereign wealth fund Abu Dhabi Investment Authority, did not specify why the deal needs to be revised. “We need to talk with the Indians about other issues...including this,” he said.
The deal is intact and there are only small hiccups, an aviation ministry official said on phone from Delhi. He spoke on condition of anonymity.
“I don’t see anything that could be a deal breaker, but these (Etihad chairman’s remarks) signal that some challenges remain,” said Kapil Kaul, South Asia chief executive for aviation consultancy Capa.
“Jet Airways is a real big opportunity and critical to further strengthen Etihad’s global ambitions,” Kaul said, adding that the deal is complex and will have some regulatory challenges.
Jet Airways and Etihad Airways spokespersons declined comment.
Meanwhile, a Jet Airways board meeting, which was scheduled to be held last weekend, has been postponed to Tuesday or Wednesday, according to two persons close to the development.
Unlisted Etihad’s chief executive said this month that the Abu Dhabi carrier was conducting due diligence on making an investment and would present the findings to its board.
The Jet Airways deal would be the first foreign investment in India’s aviation industry since the government relaxed ownership rules last September. This allows foreign airlines to buy up to 49% in the country’s domestic carriers, many of which are facing stiff competition and high operating costs.
Etihad Airways, which began operations in 2003, serves 86 cities in West Asia, Africa, Australia, Asia, Europe and North America, with a fleet of 70 Airbus SAS and Boeing Co. aircraft. It has at least 90 aircraft on firm order, including 10 Airbus A380s, the world’s largest passenger aircraft. The UAE airline has stock in Air Berlin, Air Seychelles, Virgin Australia and Aer Lingus.
Jet Airways currently operates a fleet of 99 aircraft and flies to 73 destinations in India and at least 20 overseas.
If the deal goes through, this will be the second time Jet Airways is getting foreign direct investment.
In 1993, Kuwait Airways and Gulf Air bought 20% each in Tailwinds Ltd, an overseas corporate body owned by non-resident Indian (NRI) Naresh Goyal, which held all of Jet Airways’ stock. But in April 1997, the aviation ministry ordered Jet Airways to conform to the rule that overseas airlines shouldn’t hold stock in India carriers, which was changed in September last year. Goyal then acquired the 40% holding.
Jet Airways was incorporated on 1 April 1992 as a private company, and started operations as an air taxi operator on 5 May 1993 with a fleet of four leased Boeing 737 aircraft. The airline was granted scheduled airline status, allowing it to have a network timetable, on 14 January 1995.
Sheikh Hamed also dismissed talk of the carrier’s interest in India’s grounded Kingfisher Airlines Ltd as “rumours”.
Kingfisher Airlines said in December it was in talks with several investors, including Etihad, for a stake sale, but those hopes have faded as the indebted airline remains grounded.