Jet Airways shares soar 17% after Etihad deal - NDTV

Shares in Jet Airways shot up as much as 17 per cent a day after the Indian airline announced the sale of a 24 per cent stake to Abu Dhabi-based Etihad Airways for Rs 2,060 crore. At 19.16 am, the stock traded at Rs 663.90, up  15.56 per cent , on the Bombay Stock Exchange. It touched a high of Rs 670 in opening trade. The investment is the first by an overseas operator in an Indian airline since ownership rules were relaxed and provides India's largest carrier with a deep-pocketed global partner as well as cash to retire debt. Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA), said Jet would benefit from strategic expertise, cheap financing and possible fuel import benefits in addition to the capital injection. "It (the deal) 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," said James Hogan, Etihad's chief executive. As part of the agreement Jet will establish a hub in Abu Dhabi and expand its reach through Etihad's global network while the airlines will also expand existing operations and introduce new routes between India and the Gulf. The deal, finalised after months of negotiations, is a vindication for the government which has struggled to attract overseas companies wary of regulatory uncertainty and bureaucratic red tape. Etihad will buy 27.3 million new shares of Jet at Rs 754.74 per share, a 31.7 percent premium to Jet's closing share price on Tuesday, and acquire 24 percent of Jet's expanded share capital. Etihad will also invest an additional $150 million in Jet's frequent flyer programme and spend $70 million to buy Jet's three pairs of Heathrow slots through the sale and leaseback agreement announced in February. Jet owner Naresh Goyal will hold 51 percent of the airline after the deal. "The price is good for Jet. I think Etihad may have paid over the odds slightly, but with Kingfisher out of the picture there is only one full service heavyweight in town, and that's Jet," said Sudeep Ghai, partner at consultancy Athena Aviation. (With inputs from Reuters) via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFQJbHBDmaFI1MNWv8SppQt0NlMZg&url=http://profit.ndtv.com/news/market/article-jet-airways-shares-soar-17-after-etihad-deal-321376

Put the internet to work for you. via Personal Recipe 2910127