In need of cash, Naresh Goyal may hand over Jet Airways' operational reins to Etihad

MUMBAI: Jet Airways founder-chairman Naresh Goyal is likely to rope in Etihad Airways to further invest in its equity in a bid to overcome a looming financial crisis that is currently enveloping his airline.

To save his airline, Goyal is willing to consider handing over the operational reins to the Middle Eastern carrier in exchange for a fresh cash infusion through equity and soft loans, with the founder of the airline continuing as its chairman.

Multiple people in the know said Goyal and his team met a top management team from Etihad, headed by group CEO Tony Douglas, last Sunday. Following this, Goyal had long meetings with his management at his Dubai residence.


Last week, a business channel had reported on the deal between Etihad and Jet Airways. Etihad currently owns 24% of Jet Airways while Goyal and his wife Anita Goyal together hold 51%. The deal in the works will likely see Etihad injecting new equity into the airline, holding as much as 49% in the expanded equity base. Goyal is open to his stake getting diluted to as low as 15%, depending on the extent of the cash infusion.

This is a far more desirable proposition for Goyal than a deal with Tata Sons, which wants a complete ownership stake in the airline. Talks with several investors have failed in the past as Goyal has refused to cede control.

According to sources, the Tatas with their partner Singapore Airlines wanted to take over Jet in a twostep transaction beginning with a reverse merger and ending with a buyout. These talks are now on a back burner after a recent Tata Sons board meeting saw members cautioning its management about the Jet Airways deal. Private equity fund TPG also eyed the airline, but its offer was laced with too many conditions and was not attractive for talks to continue.

Etihad holds an edge as it has the right of first refusal in case the Jet Airways promoter looks at a sale of shares, a key lever that can make or upend any deal, a source said.

For Etihad and its Abu Dhabi principals, it makes sense to resuscitate the fund-starved airline for multiple reasons, a source said. About 11% of Etihad’s passengers originate from India to overseas destinations.

Any setback to Jet Airways will impact it directly in terms of a captive feed of passengers. Further, the Middle Eastern carrier has a point to prove, after its investments have not paid off in Alitalia, Air Berlin and Jet Airways. Not investing further in Jet Airways would mean its entire investment in terms of management and funding so far will be in vain.

Not just that, Emirates, its peer from Dubai, flies about 18% of the passengers originating from India. There were media reports on a grand merger between Emirates and Etihad, which were denied subsequently by the two airlines.