Etihad Airways PJSC is proposing a Jet Airways India Ltd. rights issue to fund expansion, with the latter needing recapitalization of as much as $1 billion, Bloomberg TV India reported Wednesday, citing unnamed sources.
The channel on Tuesday reported Etihad had approached India’s Aviation Ministry for permission to raise its 24 percent stake in Jet, adding officials aren’t keen on giving approval. That report cited unidentified government officials.
Etihad has said it isn’t in talks with the government for a higher shareholding. The reports on the airline potentially increasing its stake in Jet are “entirely incorrect,” Jet said in an exchange statement today.
Jet Airways is facing more competition after the local ventures of AirAsia Bhd. and Singapore Airlines Ltd. began flights. India’s airlines have lost more than $10 billion since 2009, according to Sydney-based CAPA Centre for Aviation, hurt by below-cost fares and high taxes on jet fuel. The debt of airlines in India exceeds their revenue, CAPA said in a report.
Jet Airways’ shares climbed as much as 6.8 percent in Mumbai on Wednesday, and were trading 1.3 percent higher as of 3:22 p.m. in a third straight day of gains.
Mumbai-based Jet Airways sold a 24 percent stake to Etihad in 2013, becoming the first Indian carrier to receive investment from a foreign airline after the government eased rules.