On 22nd January 2013, Irish Travel Trade News reported that: “Etihad Airways could pay up to U$330 million for a 24% stake in Jet Airways, India’s second-biggest carrier.” Etihad has now confirmed that it will make a $379 million investment, buying 27.3 million new shares of Jet Airways at 754.74 rupees per share, a 31.7% premium to Jet’s closing share price on Tuesday, and acquire 24% of Jet’s expanded share capital.
Etihad will also invest an additional $150 million in Jet’s frequent flyer programme and spend $70 million to buy Jet’s three pairs of London Heathrow slots through the sale and leaseback agreement announced in February.
Etihad said the move would allow it to take a bigger foothold in the growing Indian market. The latest $379 million investment is the first by an overseas operator in an Indian airline since ownership rules were relaxed. Following the deal, Jet is likely to benefit from strategic expertise, cheap financing and possible fuel import benefits in addition to the capital injection.
“The deal is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years,” said James Hogan, Etihad President and Chief Executive.