Etihad to up stakes in Jet Airways – sources

Etihad to up stakes in Jet Airways – sources

Close sources at UAE’s Etihad Airways said the national carrier plans to hike its stake in debt-laden Jet Airways.

Reuters News cited a person close to the Abu Dhabi-based carrier this morning, further driving up shares of the Indian airline.

Data compiled shows that Jet shares had already spiked following a CNBC TV18 report that, apart from flagging the capital infusion from Etihad, also said Jet’s founder and chairman, 69-year old Naresh Goyal, was likely to step down from the board and give up majority control.

Goyal’s penchant for control, according to people who have worked with him, has emerged as a major obstacle as the airline tries to negotiate a rescue deal, Reuters reported last month.

The person who spoke to Reuters, on condition of anonymity, said Goyal was on his way out but did not clarify if that meant he was stepping down as chairman or from the board.

Jet shares jumped as much as 7 percent early on Tuesday, after spiking 16 percent on Monday. Shares are trading at the highest levels in more than a month.

Etihad putting more cash into Jet is conditional on Goyal diluting his stake, another person told Reuters last month. The Abu Dhabi carrier currently owns 24 percent in Jet.

Despite the push for more stakes in Jet, Etihad’s stake will be capped at 49 percent given foreign ownership rules in Indian airlines.

Once its stake goes past 25 percent, under the country’s capital markets regulations, Etihad will have to make an open offer to shareholders for a majority of the shares, unless it obtains a rare exemption from the market regulator.

Reuters cited CNBC TV18 which cited other sources on Monday that Goyal would trim his 51 percent stake to 20-25 percent and agree to voting rights on his stake being capped at 10 percent.

Reuters News reported that Etihad declined to comment.