There was no problem in a stake sale deal between Jet Airways and the Abu Dhabi-based Etihad Airways if the two airlines get regulatory clearance, Civil Aviation Minister Ajit Singh said on Thursday.
New Delhi: There was no problem in a stake sale deal between Jet Airways and the Abu Dhabi-based Etihad Airways if the two airlines get regulatory clearance, Civil Aviation Minister Ajit Singh said on Thursday.
"Unless the deal is signed and approved, we can't say the deal is done. But I don't see any problems. Once they sign the agreement, they will go through the regulatory requirements," Ajit Singh told reporters at his residence after meeting a delegation comprising members of both airlines.
According to the minister, talks between both the airlines were going on for a month, and both parties seem to have come to an understanding for a possible stake sale by Jet Airways to the Abu Dhabi based passenger carrier.
"This is a very good move... that Jet and Etihad are talking about a deal. Our concern is that the aviation sector in India should grow and that the competition should also grow," Ajit Singh said without divulging any details about the discussions that were held.
Asked about any concern raised by Etihad, Ajit Singh said this was an initial meeting to know the position of both the airlines on a possible deal and that both know the ground realities.
"Any foreign airline investing money has many concerns. On the policy, what's the cost structure, becuse they are going to put in money to make money out of it (investment). They have been discussing this deal for over a month."
The delegation was led by the top executives of both airlines, including Jet Airway's Naresh Goel and Eithad's chief executive James Hogan.
The delegations will meet Commerce Minister Anand Sharma later in the day to brief him about possible foreign capital infusion from the Abu Dhabi based airline into the Indian domestic passenger carrier.
Stock of Jet Airways shares was higher by 15.35 points or 2.57 percent in Thursday's intra-day trade at the Bombay Stock Exchange (BSE) on the back of reports that the Abu Dhabi-based airlines may invest in the company.
The company's scrip at the BSE around 12.30 p.m. jumped by 2.57 percent to Rs.611.55 per share from its previous close of Rs.596.20.
Talk of a possible stake sale has been doing the rounds for three months, ever since the government allowed foreign airlines to pick up 49 percent shares in domestic carriers.
The reports of a possible stake sale also pushed the scrip of Jet Airways and it touched a 52-week high Dec 17. The scrip at the BSE had recorded a 4.53 percent jump at Rs.636.70 per share from its previous close of Rs.609.10 Dec 14.
The government earlier allowed foreign airlines to invest up to 49 percent in private domestic carriers. The foreign carriers have so far not been allowed to directly invest in Indian carriers for security reasons although 49 percent FDI by non-airline players was allowed.
The Indian civil aviation sector has been going through a tough operating environment with high fuel and interest costs hurting it. The government expects that the decision will help bring in more funds to the airlines that have been cold-shouldered by banks.