Jet Etihad Deal gets standing ovation from Industrial Chambers

The deal between Jet Airways and Abu Dhabi-based Etihad Airways has been given a standing ovation by the Top Industrial Body ASSCHAM.

“Induction of capital by Etihad, one of the most efficient airlines of the world will not only improve the financial position of Jet Airways but also bring several operational benefits,” the Associated Chambers of Commerce and Industry (Assocham) said in a statement on Sunday.

The Indian civil aviation sector has been going through a tough operating environment with high fuel and interest costs – and lower passenger traffic.

“The good thing is that in the last few months several initiatives have been taken to increase the comfort level of the global investors,” Assocham said.

It added that after the Etihad-Jet deal, fresh efforts should be made to revive the grounded Kingfisher Airlines.

A joint delegation of Jet Airways and Etihad Airways met Finance Minister P. Chidambaramon  Thursday, indicating that a stake-sale deal between the airlines could be round the corner.

The delegation, led by Jet Airways’ Naresh Goel and Etihad chief executive James Hogan, had met Civil Aviation Minister Ajit Singh and Commerce Minister Anand Sharma Jan 31.

The stock of Jet Airways shares closed higher by 25.90 points or 4.34 percent in Thursday’s 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 closed at Rs.622.10 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.

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.