ABU DHABI (Reuters) – Etihad Airways, which owns 24 percent of debt-laden company Jet Airways <JET.NS>, plans to increase its stake in the Indian airline, a source close to the Abu Dhabi carrier told Reuters on Monday.
Shares in India’s Jet Airways jumped over 18 percent on Monday after CNBC TV18 reported earlier on Monday that founder and chairman Naresh Goyal was likely to step down from the board and give up majority control. The report also said that Etihad may infuse more capital into Jet.
The source, who spoke on condition of anonymity, said Goyal was on his way out but did not clarify if that would mean he is stepping down as chairman or from the board.
Etihad putting more money into the Indian carrier is conditional on Goyal diluting his stake, a source told Reuters last month.
Even so, Etihad’s stake will be capped at 49 percent due to foreign ownership rules in Indian airlines and if it goes past the 25 percent ownership threshold, it would need to adhere to capital markets regulations and make an open offer to shareholders to buy a further 26 percent stake.
CNBC TV18, citing sources, reported that Goyal would trim his 51 percent stake to 20-25 percent and agree to voting rights on his stake being capped at 10 percent.
Etihad declined to comment. Jet and Goyal did not immediately respond to emails seeking comment.
Jet said on Jan. 2 it had defaulted on debt payments to a consortium of Indian banks and that it was in talks with the consortium led by State Bank of India <SBI.NS>.
The 25-year-old airline is facing financial difficulties and owes money to pilots, lessors and vendors. Intense pricing competition, a weak rupee and rising fuel costs weighed on Indian airlines in 2018.
Last week, Reuters reported that crisis talks between Jet and aircraft lessors had failed to ease the row over late payments, prompting some lessors to explore repossessing their aircraft.