Abu Dhabi-based Etihad Airways says rejected reports claiming that it might sell its entire 24 per cent stake in Jet Airways by the third quarter of FY 2019. Aviation consultancy CAPA had said in a report that Etihad could exit Jet as part of a new growth strategy.
The CAPA report, prepared for private circulation, was not available on its website. The consultancy tweeted on Thursday “CAPA research indicates that Etihad may divest its 24% stake in @jetairways, possibly by Q3 of FY2019. This could lead to a rationalisation of capacity between India and the Gulf, particularly Abu Dhabi.”
Etihad, which is among the big 3 Gulf airlines built up a global presence stitching up alliances and picking up investments in airlines around the world, including Jet Airways. But following failures at Alitalia and Air Berlin, its two high-profile investments, Etihad is said to be working on a course correction.
Recently, Etihad has also downsized its fleet phasing out its Boeing 777-200LRs, Airbus A330 freighters and Airbus A340 aircraft and also offering leave without pay to its pilots. The slowdown in the Gulf economies as a result of a decline in crude oil price is another factor which could influence Etihad's growth plans.
“We have no plans to sell the stake to another investor. Also, our partner Etihad has no intention to exit their investment in Jet Airways,” Goyal told reporters on the sidelines of the annual general meeting. Last September Jet Airways chairman Naresh Goyal had denied that Etihad is exiting the airline.
The Abu Dhabi-based Etihad had in April 2013 invested Rs 20.69 billion in Jet for a 24 per cent equity. Additionally, Etihad also invested $ 150 million and picked up 50 per cent stake in Jet's frequent flyer programme and carried out and purchase and leaseback of Jet's coveted slots at the Heathrow airport in London.
Incidentally Jet has turned out to be one of the better performing investments for Etihad. It clocked annual profit of Rs 12.12 billion in FY 2016, its first full year profit in eight years and a year earlier before its targeted date. The airline has posted eleven consecutive quarterly profits but it recent results the profit has declined because of lower contribution from aircraft sale and lease income.