New Delhi, Jan. 3: Jet Airways has admitted it was in talks with Abu Dhabi-based Etihad Airways for a possible stake sale after keeping the negotiations under wraps for several months.
The deal, likely to be signed in 10 days, would make the Naresh Goyal-led carrier the first in the country to attract investment from a foreign airline.
"Jet and Etihad are in discussion regarding a potential investment by the latter, these discussions have commenced recently after the FDI policy was liberalised, which permitted foreign investment in the shares of an Indian airline," Jet Airways said in a statement.
"The discussions are in progress but no terms have been firmed up at present. Various structures are being explored by the legal and commercial teams."
This is the first time that Jet has admitted holding talks with Etihad for a potential investment since the FDI policy was amended by the government in September 2012 to allow foreign airlines to buy up to 49 per cent equity in an Indian carrier.
According to sources, Etihad may buy 24 per cent stake for about Rs 1,800 crore. Talks between Etihad and Kingfisher Airlines fell through after the Vijay Mallya-led carrier failed to impress both Etihad and the Directorate General of Civil Aviation (DGCA) with its financial turnaround plan.
Jet officials said the completion of agreement between the two carriers was likely to take some time because of the complexity of the legal requirements for the deal.
The carriers have appointed global consultants as they want the investments to be on a sound footing, given the high operating costs in India. Etihad's board of directors is reportedly going to decide soon on the issue.
According to the BSE, Jet said it had not yet sought any regulatory approval as a deal with Etihad was still to be firmed up. An appropriate announcement would be made upon the finalisation of the terms of the investment with Etihad according to the legal and regulatory requirements.
Following the statement, shares of Jet Airways rose sharply by about 7 per cent to Rs 618.70. Etihad spokesperson Thomas Clarke said, "Our position on the issue remains the same as we have stated earlier."
Etihad has in the past two years picked up stakes in several international carriers such as Virgin Australia, Air Berlin, Air Seychelles and Aer Lingus.
Analysts said Goyal was keen on diluting his shareholding following orders by the Foreign Investment Promotion Board to bring his 80 per cent stake in Jet down to regulatory levels.
Meanwhile, Air India today set up a committee to lower its high costs of operations and improve the utilisation of resources to help the state-run carrier achieve the goals of its turnaround and financial restructuring plans.
A five-member committee, headed by IIM-Ahmedabad's Professor Ravindra H Dholakia, was set up by Civil Aviation Minister Ajit Singh after a review meeting of the ailing national carrier's functioning.