Etihad, Jet CEOs meet Chidambaram

Ahead of finalising Etihad's deal to acquire 24 per cent stake in Jet Airways, top brass of the two carriers today met Finance Minister P Chidambaram here and are understood to have discussed regulatory requirements.

"I am happy and satisfied. I will speak to you at the right time," Jet promoter Naresh Goyal told reporters after he and Etihad President and CEO James Hogan met Chidambaram at the North Block headquarters of the Finance Ministry.

The two airlines are likely to clinch the deal soon and apply for approval of the stake sale deal to the Foreign Investment Promotion Board (FIPB) of the Finance Ministry. Speculation is rife that the deal would be firmed up in the next ten days.

Asked by when would they apply to the FIPB, Goyal said, "Whatever happens, we will tell you when it happens".

Hogan said, "All meetings have been great." Both of them refused to elaborate any further.

Goyal, Hogan and other officials of the two carriers had on Thursday called on Commerce Minister Anand Sharma and Civil Aviation Minister Ajit Singh, with the latter saying that any deal should be within the regulatory framework and both airlines must meet all necessary requirements.

Etihad is likely to buy 24 per cent equity in Jet Airways valued at about Rs 1,800 crore (Rs 18 billion). If the deal is carried through, it would be the first investment by a foreign carrier in an Indian airline.

Besides expanding the equity base of the premier Indian carrier, a major reason for Goyal to dilute part of his shareholding in Jet from 80 per cent has been the FIPB order to bring it down to regulatory levels.

Jet Airways has an equity base of 8.63 crore (83 million) shares, valued at Rs 5,370 crore (Rs 53.7 billion). At the end of the December quarter, M/S Tailwinds, Jet's promoter company owned by Goyal himself and incorporated in the Isle of Man, had 79.99 per cent stake, while Goyal had a personal stake of 0.01 per cent.

While various structures and parameters of the agreement are being examined by the legal and commercial teams of Jet and Etihad so that they meet all regulatory requirements, sources said the Indian carrier is likely to expand its equity base and issue additional shares to give effect to the deal.

While the Abu Dhabi-based carrier could have a fair number of seats on the Jet Board, a new CEO, probably an Indian, could be appointed for Jet jointly by the management of the two airlines once the deal is implemented.

Goyal is likely to retain his position as Jet chairman under the changes in the management structure that are being foreseen, they said.

The proceeds of the sale of 24 per cent equity would not go to Jet's promoters Naresh Goyal and M/S Tailwinds Limited, the airline's parent company owned by Goyal himself, but to the airline itself, the sources said.

With the finalisation of the deal, Jet Airways could use Abu Dhabi as a hub for onwards flights to North America and Africa, the sources said, adding that it is likely to establish a hub in Europe, at airports like Munich, for intra-European operations.

Etihad has in the past two years picked up stake in several international carriers like Virgin Australia, Airberlin, Air Seychelles and Aer Lingus.