Etihad has put Jet Airways’ revival plan on abeyance for now

New Delhi: Seeking more clarity on various contentious issues, Etihad Airways, the knight in shining armour for the ailing Jet Airways, has made a temporary halt in its equity infusion plan for the debt-ridden airline, two sources with knowledge of the matter said. If the talks between the two companies do not materialise, the prospects of Jet's rescue plan could be at risk.

Etihad has been unable to find a local partner to replace Jet's founder-chairman Naresh Goyal, who will have to step down if the Abu Dhabi-owned carrier invests in Jet, the sources said. According to sources, Goyal last week already decided to leave his post as chairman of the carrier's board, agreeing to bring down his stake from 51 percent to 20 percent.

"The banks cannot remain invested in Jet Airways infinitely and they will need to find a buyer for their stake. So far all efforts to find an Indian partner who can replace current promoter Naresh Goyal have come to naught," he said.

FDI allows foreign carrier to own 49% stake

A foreign airline is permitted to own up to a 49 percent stake in a domestic carrier, as per Foreign direct investment (FDI) rules, but it also mandates that the foreign entity should have a local partner to service passengers in the country.

The UAE-based carrier would also require an exemption from the open offer that might possibly be triggered if the company's ownership structure changes after Goyal's exit. Once Etihad infuses equity into the company, the carrier will also seek a commitment from lenders on additional loans, as they expect that Jet would need additional funds to sustain its operations.

The board of Etihad is likely to meet next week to examine the potential investments, including the possible exit of Indian banks, sources added.