India's Jet shares plunge on Etihad deal delay

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Shares in Jet Airways fell as much as 6.8 percent on Monday, a day after the chairman of Etihad Airways said the Abu Dhabi-based carrier needed to revise the terms of a pending deal to buy a stake in the Indian airline.

Etihad Chairman Sheikh Hamed bin Zayed al-Nahayan told Reuters on Sunday it was too soon to say when a final agreement between the two carriers would be struck.

The deal would be the first since India relaxed ownership rules in September and allowed foreign carriers to buy up to 49 percent in local carriers, which are battling stiff competition and high operating costs.

Jet shares have more than doubled in value in the past 10 months to reach a high of 647.80 rupees on Jan. 28. But in the past three weeks they have slumped as much as 11 percent as the companies struggled to seal an agreement.

At 0546 GMT, Jet shares were down 5.35 percent at INR584.9 in a Mumbai market that rose 0.25 percent.

Finding a way around Jet's complicated shareholding pattern and having a significant say in Jet's board decisions could be Etihad's concerns, said Rajan Mehra, an industry expert and the India head of U.S.-based private jet operator Universal Aviation.

The founder of Jet is likely to convert shares owned by its holding company into his personal stake to comply with foreign investment regulations, an Indian government source has said.

Tail Winds Ltd, the Isle of Man-based investment vehicle of Jet founder Naresh Goyal, currently holds 79.99 percent of Jet Airways. According to Indian rules, foreign companies can hold a maximum 49 percent stake in local carriers, but so-called non-resident Indians like Goyal are exempted.

As a foreign company, Tail Winds cannot engage in share trades with another foreign company but Goyal can sell his personal stake.

Indian media reports have said Etihad is seeking half the seats on Jet's board and a say in appointing the chief executive, potentially running foul of foreign investment rules that require a majority of airline board members to be Indians.

The terms of the potential deal have not been disclosed, but the government source said last month that Etihad was in talks to pick up a 24 percent stake in Jet for up to US$330m.

A Jet spokeswoman did not immediately respond to a request for comment.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Crowded skies in the Middle East

Crowded skies in the Middle East

Aviation experts give their suggestions on how to solve the Middle...

Cracking the code

Cracking the code

Strategic codeshare agreements are a win-win situation for gulf...

Stronger together? Reviewing Emirates' historic partnership with Qantas

Stronger together? Reviewing Emirates' historic partnership with Qantas

One year after the “historic” Emirates-Qantas partnership deal...

1
Most Discussed
  • 10
    UAE teens among the highest for obesity rates

    Everyone in UAE knows that biggest is best.

    UAE may not light up the international league tables in standard of living, education standards, press... more

    Friday, 29 August 2014 4:20 PM - Proud UAEer
  • 9
    Saudi Arabia seeks talks on hiring of Sri Lankan maids

    perhaps the unemployed saudi men or the millions of women who are not allowed to work could pick up a broom and start sweeping their own houses. more

    Sunday, 31 August 2014 3:28 PM - nice
  • 9
    Smoke-free Dubai - the big debate

    Surprisingly the only studies that show a negative financial impact of the smoking ban on the hospitality industry are sponsored by tobacco companies ... more

    Wednesday, 27 August 2014 4:19 PM - Telcoguy
  • 24
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 23
    Baby NOT on board?

    Some of you cry babies need to get your own personal apartments on the plane ! You cry more then the babies I have seen in my travels. LOL more

    Thursday, 28 August 2014 9:10 AM - Jim
  • 21
    Israel “must be punished” over Gaza, says Dubai police chief

    This high moral ground that Mick is talking abt sound very familiar. May I remind Mick that the US & its British ally alone killed over 1 million innocent... more

    Thursday, 7 August 2014 4:12 PM - Mathew