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Shares in Jet Airways dipped more than 12 per cent on Monday morning on Friday’s decision by India’s Foreign Investment Promotion Board (FIPB) to defer approving Etihad Airways’ plan to buy a stake in the Indian airline.
It may be having a rough time at home, but South African Airways still has friends overseas – and the latest is Etihad Airways. The airlines announced a strategic partnership on Monday, including a route-sharing partnership on flights to Abu Dhabi and beyond.
After months in the pipeline, a deal has finally been announced between India’s Jet Airways and Etihad.
The UAE’s national carrier will pay Rs754.74 per share for a 24 per cent stake in Jet, valuing the deal at Rs20.6bn ($380m). It’s good news for both parties in the deal. But it’s very bad news for Jet’s main competitor – the state-owned Air India.
Abu Dhabi’s Etihad Airways appears to have developed a taste for Indian airlines. Just last month, there were rumours that the state-owned airline was considering investing in Vijay Mallya’s grounded airline, Kingfisher.
Etihad Airways, the Gulf carrier, is on the cusp of buying a stake in the debt-encumbered Kingfisher Airlines – the airline that has been grounded since October.
Jet Airways shares soared 7 per cent in Mumbai on Monday on a report that the airline was getting close to finalising a proposed tie-up with Etihad Airways, the Gulf carrier.
Mint newspaper said Jet would soon seek regulatory approval to alter its ownership structure to permit a stake sale to Etihad. If it goes ahead, the deal would be India’s first big foreign investment to come from prime minister Manmohan Singh’s recent economic reforms, which include a move allowing foreign carriers to buy 49 per cent of an Indian airline.
Shares in Jet Airways and SpiceJet soared on Monday by nearly a fifth after an Indian government official confirmed the worst-kept secret in Mumbai – the two carriers are in talks with potential foreign investors.
Jet is discussing selling a stake to Etihad Airways and SpiceJet is having similar discussions with Malaysia’s AirAsia, said the official. These are the first deal plans to be made public since New Delhi liberalised investment by foreign carriers in September.
By Nicholas Watson of bne
Emirates, the Gulf carrier, is preparing a new route from its Dubai hub to Poland and upgrading its connection to Russia by putting Moscow on its Airbus 380 superjumbo flight list.
While such an expansion by the world’s largest airline is a vote of confidence in emerging Europe, it’s less good news for the region’s struggling flag carriers that are desperately looking to be rescued by such global airlines.
It may have only 22 planes, but Flydubai has weathered the global financial crisis and is now expanding. Even among some of the world’s richest fliers, there are those who don’t mind a spot of cut-price flying – though without the bargain basement feel of some of the industry’s stalwarts.