India's Jet Airways Shares Fall as Etihad Approval Delayed
Shares of India's private carrier Jet Airways slumped nearly 12.3 percent Monday morning, after authorities last week delayed approval for Abu Dhabi-based airline Etihad to acquire a stake.
Jet shares fell as much as 12.27 percent to a low of 411.6 rupees at the Bombay Stock Exchange.
The Jet-Etihad deal, announced in April, is the first overseas investment in an existing Indian carrier since New Delhi eased restrictions to allow foreign firms to take up to a 49 percent stake in the country's airlines.
Etihad plans to pick up a 24 percent stake in Jet Airways under the agreement.
India's Economic Affairs Secretary Arvind Mayaram said the proposal was deferred as they required more details of the effective control and ownership of the new firm.
The Etihad investment will allow Jet to reduce its hefty debt and expand its global reach by using the UAE airline's network.
In March, India's foreign investment panel cleared a proposal by low cost Malaysia-based AirAsia to set up an airline in India through a joint venture with the Tata conglomerate and another partner.
Indian airlines have been under pressure to grow due to fierce competition among carriers, with India's rapidly expanding middle class starting to favor air travel over the country's main mode of transport by train.
17 June 2013, 11:41
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New legislation in India allows foreign holdings of 49% in local airlines. Now the Economics Affairs Secretary holds up a proposal to take a 24% stake in Jet Airways.
If I were Etihad management I'd pull out of the deal, let Jet collapse both as an airline and also on the Stock Exchange, then have Economics Affairs Secretary Arvind Mayaram, explain in detail to the public and the shareholders why he personally went against the law to let this happen. Would be very interesting to hear.
18 June 2013, 08:07
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The minister did not oppose to the proposal, he is holding it for further details which should have been provided in the first place. His holding up is a valid move to safeguard that the rules are not bent. The public and shareholders should question the management for failing to supply these documents with the proposal.
