Jet Airways To Divest Foreign Stakes By Oct 15

Jet Airways will divest 40 per cent shares held by two foreign airlines - Gulf Air and Kuwait Airways - before the October 15 deadline set by the civil aviation ministry.

The deadline was set by the government following the announcement of the new civil aviation policy which prohibits participation of foreign airlines in domestic airline ventures.

In a letter to the ministry on June 10, Jet Airways stated that it was studying the matter regarding divesting of stakes held by the two foreign airlines to comply with the latest government regulations, industry sources said.

Gulf Air and Kuwait Airways each hold 20 per cent stake in Tailwind, the holding company of Jet Airways, while 60 per cent is held by chairman and London-based non-resident Indian ((NRI), Naresh Goyal.

 

According to the policy, formulated in March by civil aviation minister C M Ibrahim, no foreign airline can hold a stake in private airline ventures in the country.

After announcing the civil aviation policy, the government had given Jet Airways time until October 15 to disinvest the shares held by the two foreign airlines.

Sources said Jet Airways would not wait until the middle of October for this and will undertake the exercise by August itself.

Accordingly, the company is exploring the possibility of Goyal picking up the entire stakes in the company, sources said.

As the aviation policy allows NRIs to hold 100 per cent equity, the chances of Goyal picking up the entire stake cannot be ruled out, sources said.

Jet Airways is actively exploring that possibility as the first option, sources said.

The policy, however, permits foreign companies other than airlines to hold up to 40 per cent stakes.

Formulated in March, the policy raised many controversies as it effectively ruled out permission to a proposal by Tata and Singapore Airlines for flying the domestic skies.

Jet airways, in response to the ministrys reminder on April 17, held a board meeting of Tailwind in Bahrain on April 27 to discuss the matter, where NRIs in the board and representatives of the two foreign airlines participated.

Modalities of disinvestment and how to work on that direction were taken up in that board meeting, sources said.

Registered at Isle of Man, near England, Tailwind has a paid-up capital of Rs 20 crore.

Last year, Jet Airways had a turnover of Rs 450 crore and made marginal profits, sources said.