India’s civil aviation minister has threatened to resign and has accused the Prime Minister’s office of blocking Abu Dhabi-backed Etihad’s bid to buy 24 percent of Indian carrier Jet Airways, it has been reported.
Sources told the Daily Mail newspaper Civil Aviation Minister Ajit Singh was threatening to quit the government over attempts to stall the $379m Etihad deal.
"I don't see a problem in the Abu Dhabi deal going through. Ask the Prime Minister's Office if the deal is on hold despite being signed," Singh was quoted as saying.
Singh has been a positive force behind the deal by Abu Dhabi’s Etihad Airways to buy a 24 stake in Jet Airways, announced in April and currently awaiting regulatory approval.
The deal has proved controversial and objections were raised by a Parliamentary Standing Committee headed by MP Sitaram Yechury. At the same time, several MPS have also sent a letter of objection to Indian Prime Minister Manmohan Singh.
The MPs are said to be concerned over a Bilateral Air Services Agreement between the UAE and India, which gives Emirati airlines an additional 36,000 seats on Indian routes and which was announced the same day as the Etihad stake sale.
Jet Airways, controlled by Indian businessman Naresh Goyal, said its net loss widened to 4.96 billion rupees ($89m) for its fiscal fourth-quarter ended March, from 2.98 billion rupees reported a year earlier.
However, it claimed that its planned deal with Etihad would bring "immediate revenue growth and cost synergy opportunities" and help strengthen its balance sheet.
Etihad's investment in Jet is the first by an overseas operator in an Indian airline since ownership rules were relaxed and provides Jet with a deep-pocketed global partner as well as cash to retire debt.