Etihad has successfully concluded a transaction that sees it take a 24 per cent equity stake in India’s Jet Airways. In April the two airlines signaled their intent to form an equity alliance, made possible by a relaxation in Indian foreign investment regulations.
The deal was valued at US$325 million and comes after Emirates reportedly turned down an invitation from Jet Airways to take equity.
Etihad will use the equity in Jet Airways to strengthen its position in the growing Indian market and to enhance connectivity with its broader global network.
The effect of the collaboration will begin immediately, with the two airlines offering seamless reciprocal codeshare services. Beyond that, the airlines said further details would be released progressively. Jet Airways and Etihad will also spin-off of Jet’s frequent flyer program into a separate subsidiary into which Etihad will hold 50.5 per cent in the program and invest $150 million.
Naresh Goyal, Chairman of Jet Airways said: “The infusion of foreign direct investment in the aviation sector will result in economies of scale, grow traffic at our airports, and create job opportunities. I am confident that this investment will greatly benefit all our stakeholders whilst significantly benefitting our customers who will now have access to a more expanded global network.”
As part of the arrangement, Etihad has been allocated two places as directors on the board of Jet Airways as from November 20, 2013.
