Etihad buys Heathrow slots of India's Jet Airways

Etihad may purchase a 24 per cent stake in the Mumbai-based carrier at 760 rupees a share. Indranil Mukherjee / AFP

Etihad Airways has purchased Jet Airways’ Heathrow slots amid continuing talks to buy a stake in the Indian carrier.

The UAE’s national airline confirmed yesterday that it paid US$70 million (Dh257.1m) to buy Jet’s three pairs of slots at the London airport. The deal is part of a “sale and lease back agreement”, Etihad said in a statement yesterday.

“Jet Airways will continue to operate flights to London utilising these slots,” it said.

Jet confirmed at the start of January that it was in talks to sell part of the company to Etihad.

Shares in the Indian airline surged by almost 20 per cent yesterday after an Indian business news channel cited unnamed sources claiming Etihad was close to concluding a deal for a 24 per cent stake.

The channel reported that Etihad had paid a “token” amount of $70 million and is likely to pay $400m in the first tranche of the deal. Jet Airways referred queries about the report to Etihad yesterday, but the UAE airline declined to comment.

According to a Bloomberg TV India report, Etihad will also give Jet a five-year loan of $400m to help repay debt.

“It’s a surprise that Etihad is extending a soft loan to Jet,” said Arun Kejriwal, director at Kejriwal Research & Investment Services.

“It also indicates the hard bargain on the deal.”

The stake would be the first since India relaxed ownership rules in September allowing foreign airlines to buy up to 49 per cent of local carriers.

Industry specialists say Etihad will have to find a way around Jet’s complicated shareholding structure to strike a deal.

But if successful, Etihad would buy in to one of the fastest-growing aviation markets in the world, where air travel is expected to triple by 2021. The carrier has already created the industry’s first “equity alliance” with stakes in Virgin Australia, Aer Lingus, Air Berlin and Air Seychelles.

*  with agencies