Dubai: Etihad Airways might be about to double down on a risky investment in India.
Abu Dhabi’s flagship carrier is reportedly looking to increase its stake in cash-strapped Jet Airways, one of the biggest airlines in a market forecast to grow rapidly over the next five years.
According to Indian media reports, Etihad is planning a cash injection to increase its ownership share from 24% to 49%, the most a foreign investor is allowed to hold in an Indian airline.
Etihad declined to comment on the reports.
Jet Airways struggled through 2018 as higher oil prices, a plunge in the rupee and increased competition took a toll on Indian airlines. Its stock fell around 8% on Wednesday.
The carrier said in a stock market filing after the close that it has been “working on various cost cutting measures, debt reduction and funding options” as well as a “comprehensive” turnaround plan.
A decision by Etihad to pump more money into Jet Airways could be risky.
The Indian airline’s stock price has fallen 66% in the past year, and the company acknowledged earlier this month that it had missed debt payments to a consortium of Indian banks because of a “temporary cashflow mismatch.”
“A stake increase would be perhaps surprising,” said John Strickland, an aviation industry consultant at JLS Consulting.
16/01/19 Zahraa Alkhalisi and Rishi Iyengar/CNN