ETIHAD, JET AIRWAYS FORGE ALLIANCE
Etihad Airways and Jet Airways have forged a strategic alliance with the UAE national carrier agreeing to subscribe for 27,263,372 new shares in Jet Airways at a price of INR754.74 per share. The value of this equity investment is US$379 million and will result in Etihad holding 24% of the enlarged share capital of Jet Airways. Etihad’s wider overall commitment to Jet Airways includes the injection of US$220 million to create and strengthen a wide-ranging partnership between the two carriers. As part of this, Etihad Airways paid US$70 million to purchase Jet Airways’ three pairs of Heathrow slots through the sale and lease back agreement announced on Feb. 27. Jet Airways continues to operate flights to London utilizing these slots. An amount of US$150 million will be invested by Etihad by way of a majority equity investment in Jet Airways’ frequent flyer program “Jet Privilege,”subject to appropriate regulatory and corporate approvals and final commercial agreements which are expected to be completed within the next six months. Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi, providing an ever wider choice to travellers. They 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. Passengers from 23 cities in India will benefit from direct connections to international destinations. Details of the investment were unveiled by Etihad Airways president James Hogan and the chairman of Jet Airways, Naresh Goyal. Hogan said, “We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines. It is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years. The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world.”Pictured (l-r) are Captain Hameed Ali, Acting CEO Jet Airways; James Hogan, President and CEO, Etihad Airways; Naresh Goyal, Chairman of Jet Airways; and James Rigney, Chief Financial Officer, Etihad Airways. (http://www.etihad.com , http://www.jetairways.com)
