Jet Airways, Etihad ink strategic alliance

MANILA, Philippines - Etihad Airways of the United Arab Emirates and Jet Airways of India today announce that the UAE national carrier has agreed 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 $379 million and will result in Etihad Airways holding 24 percent of the enlarged share capital of Jet Airways.

Etihad Airways’ wider overall commitment to Jet Airways includes the injection of  $220 million to create and strengthen a wide-ranging partnership between the two carriers.

As part of this Etihad Airways paid  $70 million to purchase Jet Airways’ three pairs of Heathrow slots through the sale and lease back agreement announced on Feb. 27, 2013. Jet Airways continues to operate flights to London utilising these slots.

An amount of  $150 million will be invested by Etihad Airways 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 the travelling public. 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. New flights from Jet Airways’ home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways’ vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions.

Details of the investment were unveiled by Etihad Airways President and Chief Executive Officer, James Hogan, and the Chairman of Jet Airways, Naresh Goyal.

Mr. 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.”