Etihad Airways (EY, Abu Dhabi International) has reportedly agreed to inject fresh capital into struggling Jet Airways (JAI, Mumbai International) and to increase its shareholding to 49% but only at a steep discount, The Economic Times has reported.
Subject to the airline meeting a number of criteria, Etihad Airways would be ready to immediately inject USD35 million into the Indian carrier.
The Emirati carrier has already asked the Indian financial markets watchdog, the Securities and Exchange Board of India (SEBI), for a permit to acquire Jet Airways shares at what it considers the fair price of around INR150 rupees per share (USD2.10). At the end of trading on January 16, the carrier's shares were traded at the Bombay Stock Exchange (BSE) for INR270 rupees per share (USD3.80).
"Without this approval we are not willing to invest a single penny further," Etihad CEO Tony Douglas said in a letter to the Chairman of the State Bank of India (SBI).
Etihad Airways is also seeking to minimise the role of Jet Airways founder, current majority owner, and Chairman Naresh Goyal and his family. The Emirati carrier insists that Goyal be removed from executive roles and his non-executive positions be well defined so that neither he nor his affiliates can represent the airline.
Douglas reportedly also asked that all the conditions regulating the relation between future Jet Airways' management and Naresh Goyal be drafted in a legally binding contract.
Following the transaction, Goyal's stake would drop from 51% to 22%.
Under Indian law, following its default on a part of long-term loans on January 1, 2019, Jet Airways has 180 days to come up with a viable restructuring plan. The airline had a total debt of INR84.1 billion rupees (USD1.18 billion) as of the end of September.
