Etihad in talks to increase stake in beleaguered carrier Jet Airways

Troubled carrier Jet Airways has once again started negotiations with its joint venture partner Etihad Airways for a possible bailout. Etihad, which holds 24 per cent in the Naresh Goyal-led airline, is exploring whether to increase its stake in the venture, it is learnt. Meanwhile, Jet is looking at selling part of its 49 per cent stake in its loyalty programme, Jet Privilege, to Etihad.

To take the talks further, a meeting between Jet Airways founder and chairman Goyal and the top management of the West Asian carrier has been planned abroad. 

Etihad can increase its stake in Jet by another 25 per cent to take it up to 49 per cent — the foreign direct investment cap for foreign airlines. A better representation on the Jet board (currently, it has two board members) and a larger say in the running of the airline could be among the other negotiation points for Etihad. It is likely that Etihad may support Jet partly through infusion of loans and equity. The promoters — Goyal and his family— hold a 51 per cent stake in the airline.

A Jet Airways spokesperson said, “Jet Airways continues to be in active discussions with various investors to secure sustainable financing to navigate through the current headwinds. The company does not comment on speculation.”

The move comes close on the heels of the Tatas announcing, after their recent board meeting, that they were in preliminary talks with Jet and no proposal had been discussed. Sources have indicated that top representatives of the Tata group as well as some members of the Tata Sons board have expressed concerns over Jet’s sources of funding and the airline’s high debt. 

Singapore Airlines, Tata group’s joint venture partner in Vistara, too, is treading cautiously on a deal with Jet over ownership issues in the Goyal-led airline and the various investigations faced by the company. The fact that Etihad is a key rival for Singapore Airlines in the global skies could also pose a problem. 

A Singapore Airlines spokesperson, when contacted on these issues, said, “We regret that we are not in a position to provide replies to your queries as they are speculative in nature.” 

As the talks with the Tatas could take a long time and Jet has shown no signs of coming out of the financial mess it is in, Goyal’s best bet could be to return to the negotiation table with Etihad, a source in the know said. 

Etihad, which too has been in the midst of financial trouble in the international market, and Jet haven’t been easy partners. In fact, there were talks that the West Asian airline would like to sell off its stake in Jet.

There have been signals in the past that the alliance wasn’t going well as Jet decided to sign an enhanced cooperation agreement with Air France-KLM in 2017 for development of operations between India and Europe and also included code share agreements to North America. Many saw it as a conflict with the ambitions of Etihad which wanted to make Abu Dhabi a hub to bring Indian passengers to Europe and the US. Analysts had speculated that the European airlines might replace Etihad in Jet.