Tuesday, Nov 27, 2012
(This article was originally published Monday.)
-- Jet Airways in talks with Etihad for about 45 days - official
-- SpiceJet in talks with unnamed airline - official
-- Share prices of Jet, SpiceJet surge on reports of stake-sale talks
By Santanu Choudhury and Saurabh Chaturvedi
NEW DELHI--Jet Airways (India) Ltd. (532617.BY) is in discussions with Etihad Airways to sell a stake to the Abu Dhabi-based carrier, a senior official at India's civil aviation ministry said Monday, in what could be the first such deal after the government permitted overseas carriers to buy into local airlines.
SpiceJet Ltd. (500285.BY) is also in talks to sell a stake to a foreign airline, the official told reporters.
The discussions follow the government's move in September to allow foreign airlines to own up to 49% of local carriers. Some Indian carriers such as Kingfisher Airlines Ltd. (532747.BY) had demanded such a measure from the government, saying it would bring in much-needed cash for the country's bleeding carriers.
India's airlines are suffering because of high taxes on jet fuel, rising airport fees, expensive loans, poor infrastructure and cutthroat competition. All but one airline--Interglobe Aviation Ltd.'s budget carrier IndiGo--posted losses in the financial year ended March 31.
The Centre for Asia Pacific Aviation, a Sydney-based consultancy, estimated earlier this year that Indian carriers posted a combined loss of $2.5 billion in the last financial year. It expects a similar loss this year too.
"Jet and Etihad have been in talks for more than a month and a half or so," the official at the civil aviation ministry said.
He said a deal between Jet Airways and Etihad may happen before any possible partnership by SpiceJet.
The official said also that the alliance between Jet Airways, India's biggest carrier by market share, and Etihad "will be more than a stake sale or cash infusion." He didn't elaborate.
Jet Airways said it doesn't want to comment on "speculative reports."
A spokesman for Etihad declined to comment.
A deal with Jet Airways will provide Etihad a bigger foothold in the world's second-fastest growing major economy and also allow it tap into a large number of expatriate Indians who travel to the Middle East, as well to North America and Europe.
Etihad currently owns stakes in Germany's Air Berlin, Ireland's Aer Lingus PLC, Virgin Australia and Air Seychelles.
The official declined to name the airline SpiceJet is in talks with.
Earlier in the day, SpiceJet, India's second-biggest budget carrier by market share, said a few investors have shown interest in the airline but declined to comment on reports that said the airline is in talks with Malaysia's AirAsia BhD (5099.KU) or Qatar Airways.
AirAsia and Qatar Airways couldn't be reached for comments.
Reports of a likely stake sale led Jet Airways' stock to touch a 52-week high of 598.80 rupees ($10.7) on the Bombay Stock Exchange. It closed nearly 11% up at 560.40 rupees, outperforming a 0.2% gain in the benchmark index.
SpiceJet also touched a 52-week high of 46.85 rupees, and closed 13% up at 44.40 rupees.
--Alex Delmar-Morgan in Dubai contributed to the report
Write to Santanu Choudhury at santanu.choudhury@dowjones.com and Saurabh Chaturvedi at saurabh.chaturvedi@dowjones.com
(END) Dow Jones Newswires
27-11-12 0344GMT
