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Abu Dhabi-based Etihad Airways will continue to stay invested in Jet Airways, both the airlines have said.
Aviation consultancy major CAPA had tweeted on Wednesday that Etihad Airways would divest its 24 per cent stake in Jet Airways by the third quarter of the next financial year. “CAPA research indicates that Etihad may divest its 24 per cent stake in @jetairways, possibly by Q3 of FY2019. This could lead to a rationalisation of capacity between India and the Gulf, particularly Abu Dhabi.”
A Jet Airways statement said it does not comment on speculation.
Sources in the airline maintained that there is no truth in the report and that Etihad Airways will continue to stay invested in the airline.
Etihad Airways bought a 24 per cent stake in Jet Airways in 2013 for $379 million and invested another $150 million in the airline’s frequent flyer programme.
Reports on Etihad’s the possible exit were triggered by the recent agreement between Jet Airways and Air France, which gives the Indian carrier unrestricted access to Europe and North America, resulting in a potential 40 per cent increase in traffic between Europe and India for both airlines. The agreement, announced last December, will also lead to both the airlines aligning inventory, networks and sale of each other’s tickets as well as working together on cargo operations.
Financials
Jet Airways’ net profit fell 38 per cent to ₹185 crore while revenues grew 3.5 per cent to ₹6,623 crore in the third quarter of this fiscal.
ICICI Securities, in a note to investors last month, said that, after falling since the last quarter of FY15, the domestic market share of Jet has stabilised at 17.2 per cent due to the induction of wide-body aircraft on some key metro routes. “With the stabilisation in the fleet capacity of other players and induction of a new fleet by Jet, we expect the company to gain traction in market share, going forward,” the note said.
It said the delivery of 75 fuel-efficient aircraft, B737-Max, will commence from June 2018.
Debt reduction
“With a debt reduction of over ₹1,900 crore in FY17, we expect debt levels to come down further by ₹750 crore over the next two years led by a healthy cost environment. Although we remain positive on the sector from a long-term perspective, rising crude oil prices remain a near-term risk to the company as the benefit of cost rationalisation will be visible only from H2-FY19 onwards,” ICICI Securities said.
Jet Airways’ shares ended the day flat at ₹745 on the BSE as of March 1.
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