Mumbai, April 25 (IANS) A day after Jet Airways announced its plans to off-load 24 percent stake to Abu Dhabi-based Etihad Airways for around $379 million (Rs.2,058 crore), its stocks rallied at the Bombay Stock Exchange (BSE).
The company’s scrip at the BSE was trading up 10.14 percent around 1 p.m. Thursday at Rs.632.05 per share from its previous close of Rs.573.85.
The scrip had soared nearly 16.75 percent just after the opening of the day’s trade at Rs.699 per share at around 9.15 a.m. from its previous close.
On Wednesday, the company announced that it will sell, after gaining approval from its shareholders, 24 percent stake to Etihad Airways for around Rs.2,058 crore ($379 million).
There are also plans of Etihad investing $150 million in Jet’s frequent flyer programme ‘Jet Privilege’, which is subject to regulatory approvals and commercial agreements that are expected to be completed within the next six months.
“Under the strategic partnership, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi,” Jet Airways said in a statement Wednesday evening.
“They (Jet and Etihad Airways) will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways’ growing global network,” the statement added.
However, the deal which also entails a $600 million commitment from Etihad Airways, still needs to be ratified at an extraordinary meeting of Jet’s shareholders.
Both the companies expect the deal to bring immediate revenue growth and cost savings in areas including fleet acquisition, maintenance, product development and training.
The two airlines were negotiating a Jet Airways’ stake sale since last September. However, the deal was delayed due to investment protection and management control issues.
According to sectoral experts, the deal will bring in fresh funding opportunities for Jet Airways, which has an estimated debt of around Rs.12,000 crore, whereas passengers will get better connectivity options through the Jet-Etihad network.
“It is a very positive move. There were negotiations going on for a long time. It will provide Jet with much needed financing options and a major international partner,” Sharan Lillaney, aviation analyst at broking firm Angel Broking, told IANS.
Other listed airline stocks like SpiceJet and Kingfisher Airlines too gained. SpiceJet stock was up 12.96 percent or 4.05 points at Rs.35.30 per share around 1.30 p.m. from its previous close of Rs.31.25. While that of Kingfisher Airlines was trading up 1.61 percent or 0.11 points at Rs.696 per share from its previous close of Rs.6.85.