UAE's Etihad Closer to Deal with Jet Airways
February 5, 2013 3:16 PM EST
Etihad Airways is close to taking a stake in Jet Airways, the Abu Dhabi airline said on Monday after reporting a tripling in profits for last year.
Such a deal would support the Indian carrier's efforts to woo foreign investors to help cope with fierce competition and high costs in the Indian market.
Etihad, launched in 2003, is on a buying spree to compete with regional rivals Emirates EMIRA.UL and Qatar Airways. The Gulf carrier has taken stakes in Virgin Australia and Aer Lingus and raised its shareholding in Air Berlin and Air Seychelles.
"We are doing our due diligence (on Jet Airways) in the next week. We will present it to our board and take it from there," Chief Executive James Hogan said at a press conference.
The Jet Airways deal would be the first foreign investment into India's aviation industry since the government relaxed ownership rules in September last year.
This allows foreign airlines to buy up to 49 percent in the country's domestic carriers, many of which are facing stiff competition and high operating costs.
Hogan said he had met with senior Indian aviation officials and ministers last week to understand the new rules of India's foreign direct investment scheme.
"We also wanted to understand the issues that have impacted Indian civil aviation, how they think this will change in the coming years," he said.
The terms of the possible deal have not been disclosed, but a government source said earlier this month Etihad was in talks to pick up a 24-percent stake in Jet for up to $330 million.
Unlisted Etihad reported net profit of $42 million for 2012, compared with $14 million in the previous year.
Hogan also said Etihad had no plans to cancel its orders for Boeing's (BA.N) troubled 787 Dreamliner. Etihad has a total of 41 787-9 Dreamliners on order and options for an additional 25 aircraft.
All 50 Boeing 787s are out of action as investigators in the United States, Japan and France look into problems with batteries on the aircraft.
"The 787 is a great aircraft, we have no doubt it will be resolved and the aircraft will be up and fine," Hogan said. When asked if Etihad would cancel any Boeing orders, he said: "Not at all."
Hogan also said that the airline has had no discussions with Italian carrier Alitalia beyond code sharing.
Investors in Alitalia are considering selling their shares in the airline, with some pushing for a deal with long-time stakeholder Air France-KLM (AIRF.PA).
The airline's chief financial officer James Rigney also said Etihad had no plans to issue bonds for financing its aircraft deliveries this year.
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