New Delhi, Feb. 1: The Jet Airways board today approved its stake sale to Abu Dhabi-based Etihad Airways even as a formal announcement will be deferred by a few days.
According to sources, Jet's board discussed the final draft of the deal and cleared it. Etihad still needs a few clarifications on taxation. Jet officials said these were minor queries, which would be cleared soon.
Jet expects to finalise in a week the deal, which would be the first stake sale by a domestic carrier to a foreign airline.
In September last year, foreign airlines were allowed to pick up to a 49 per cent stake in Indian carriers. Earlier, foreign airlines were not permitted to invest, directly or indirectly, in Indian carriers even as equity participation was allowed.
Earlier in the day, the top brass of the two airlines met finance minister P. Chidambaram to discuss the regulatory requirements. "I am happy and satisfied. I will speak to you at the right time," Jet promoter Naresh Goyal said after the meeting. Etihad president and CEO James Hogan was present.
The terms of the deal have not been disclosed but sources said Etihad would pick up a 24 per cent equity holding for around $330 million. Jet Airways would also restructure its board to bring in Etihad's directors.
Etihad may be allowed to nominate up to half of the new board. Sources said Jet and Etihad officials planned to come up with a joint marketing strategy before formally announcing the deal.
Earnings turn around
Jet Airways has reported a profit of Rs 85 crore for the October to December quarter compared with a loss of Rs 101 crore in the corresponding quarter of the previous fiscal. The company attributed the profit to higher yields and lower fuel cost.
Analysts said growth in revenue per passenger and strategic cost cutting aided the turnaround.
"All our efforts on revenues, costs and networks have resulted in turning around the operations. This is despite higher fuel prices and rupee depreciation," Jet CEO Nikos Kardassis said.
The Jet Airways scrip had hit an intra-day low of Rs 600 but recovered to close at Rs 622.65, a marginal gain of 0.09 per cent, on the BSE.