Jet Airways (India) Ltd., the nation’s biggest publicly-traded carrier, fell the most in a week in Mumbai trading after the government deferred a decision on the airline’s plan to sell a stake to Etihad Airways PJSC.
Shares of Jet slumped as much as 13 percent, the most since June 10, to 411.05 rupees. The stock changed hands at 431.50 rupees as of 10:28 a.m. The carrier has dropped 23 percent this year compared with the benchmark S&P BSE Sensex’s 1.3 percent decline.
India’s Foreign Investment Promotion Board on June 14 deferred its decision on Jet’s agreement to sell a 24 percent stake to Abu Dhabi’s Etihad, as authorities sought more details about the local carrier’s ownership. The airline is seeking funds to add aircraft and pare debt after six years of losses caused by fuel costs and competition from discount carriers.
Jet founder and Chairman Naresh Goyal will own 51 percent of the company after the deal, according to a company statement in April. Etihad will hold 24 percent and the remainder will be held by the public.
The Mumbai-based carrier, which agreed in April to sell its stake for 20.6 billion rupees ($356 million), is counting on Etihad funds to accelerate repayment of working capital debt, K.G. Vishwanath, vice president of commercial strategy, told analysts in a conference call on May 27. The company is considering an order for Boeing Co. 737 planes, he said.
Prime Minister Manmohan Singh’s government in September allowed foreign carriers to buy as much as 49 percent of local operators. That also prompted AirAsia Bhd., the region’s biggest discount carrier, to set up an India venture through a partnership with Tata Group. AirAsia India plans to start operations later this year.
Authorities are seeking more details from Jet about its “effective control and ownership,” Economic Affairs Secretary Arvind Mayaram said June 14 in New Delhi after the Foreign Investment Promotion Board discussed the Etihad investment.
After the Foreign Investment Promotion Board’s approval, the carrier also needs to obtain clearances from stock market regulator Securities and Exchange Board of India and the home ministry for its stake sale deal.