JOIN USJet Airways shareholders on Friday approved the sale of 24 per cent stake to Abu Dhabi-based Etihad, with the carrier's Chairman Naresh Goyal saying that the deal will improve profitability, reduce costs and lower the debts.
At the airline's Extra Ordinary General Meeting (EGM) convened here, shareholders approved the proposed issue of shares on a preferential basis to Etihad. The shares will be allotted after the completion of all regulatory approvals.
The resolution to amend the Article of Association was deferred, apparently, following the market regulator Sebi and competition watchdog Competition Commission of India seeking more clarity on the deal. Goyal said, however, that the airline has not yet received anything in writing from Sebi on the issue of AoA amendment. The deal is being looked into by Competition Commission of India (CCI) and Securities and Exchange Board of India (Sebi) besides other regulators.
Goyal said his strategic alliance with the Gulf carrier would improve Jet's profitability and bring down the costs.
"Etihad investment will help us to deleverage and grow in a sustainable manner," Goyal said, adding that "the commercial agreement with Etihad will help us to expand network, reduce costs and increase profitability". As part of the deal, Etihad will acquire 24 per cent stake in Jet Airways for about Rs 2,058 crore. The deal marks the first investment by a foreign carrier in an Indian airline since the change in the country's FDI policy last September.
Jet Senior Vice-President K G Vishwanath said the cash infusion will help the airline reduce debt from $2.1 billion (Rs 11,500 crore) to $1.5 billion (Rs 8,200 crore). Both companies have said that substantial ownership and effective control will remain with Indian nationals, with Goyal as non-executive chairman holding 51 per cent stake. Vishwanath said that of the total $2.1-billion debt, $700 million is on account of working capital which has been borrowed at high interest rates while the remaining $1.4 billion is aircraft-related loan.
Jet Q4 net loss widens
Jet Airways on Friday reported net loss of Rs 495.53 crore for the fourth quarter ended March 31, 2013 compared to loss of Rs 298.12 crore in the same period year-ago.
Total income from operations declined to Rs 3,921.92 crore in the March quarter from Rs 4,041.61 crore in the year ago period, Jet Airways said in a filing to the BSE.
For the full year ended March 31, 2013, the airline reported net loss of Rs 485.50 crore against Rs 1,236.1 crore in the same period last year. Shares of the company ended the day 3.69 per cent lower at Rs 562.70 on the BSE.