Etihad Airways said on Wednesday it has bought three pairs of Indian carrier, Jet Airways’ slots of London Heathrow airport slots for $70 million.
“The purchase is part of a sale and lease back agreement signed on Tuesday, February 26, 2013. Jet Airways will continue to operate flights to London utilising these slots,” Etihad Airways said in a statement, adding that the deal further strengthens the existing commercial relationship, which came into effect in July, 2008, making provision for codesharing between the two airlines.
The move comes as the Abu Dhabi carrier has been in talks with Jet for a potential equity stake in the carrier.
Etihad further said in the statement that it continues to “progress discussions about further investment in Jet Airways”, without divulging further details.
Jt, reportedly, had been looking to sell a 24 per cent stake to Etihad Airways for $300 million. But recent media reports stated the deal was in a limbo as Etihad wanted more representatives on Jet Airways’ board than the Indian airline was willing to offer.
Analysts, however, see the Heathrow deal as a strong step in the direction.
“The Heathrow deal is a positive development and highlights the close relationship between the two airlines. An equity deal in the highly regulated airline sector is a complex transaction,” Amber Dubey, Director - Aviation for global consultancy firm KPMG, told Gulf News. In September 2012, India allowed foreign airlines to buy up to 49 per cent stakes in Indian carriers.
“After the FDI reforms, we had estimated that it will take around 6-12 months for deals to fructify. We are on track,” said Dubey.
“Based on its record, Etihad will move to take equity stake. I expect the increasingly standard Etihad deal of less than controlling equity,” added analyst Andrew Charlton, of Aviation Avocacy.
Jet Airways shares jumped 19 per cent on Wednesday, the most in more than three years, to Rs534.70 at close of trading in Mumbai.