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Tuesday, 11 June, 2019, 10 : 15 AM [IST]

Etihad, Hinduja to step back with their plans to resurrect Jet Airways

Hinduja Group and Etihad Airways PJSC may not proceed with plans to resurrect Jet Airways (India), dealing a severe blow to efforts aimed at rescuing the airline that has suspended flights for nearly two months.

Hinduja Group has decided to halt negotiations to buy a stake in Jet Airways, while Etihad Airways of Abu Dhabi has put on hold a plan to add more investments in the Mumbai-based airline, said two people familiar with the matter, requesting anonymity.

“As far as bidding for Jet Airways is concerned, the Hinduja Group has taken a back seat now," said one of the two people cited above. “The promoters of the group feel that it is too risky for them to get involved (with Jet Airways) at the moment, due to ongoing government investigations and the recent insolvency pleas submitted by operational creditors at the National Company Law Tribunal (NCLT)."

“The NCLT process (after admission of plea by operational creditors) does have merit as it could mean a third party may invest in the airline," the second person said. “There is still value in the brand and airline, though it looks a bit difficult to revive it right now."

Meanwhile, the income tax department is probing possible tax violations by Jet Airways, while the corporate affairs ministry has ordered a probe into the books of the airline after the Registrar of Companies had submitted a report to the ministry highlighting instances of violation of the Companies Act in the airline. Separately, the Enforcement Directorate (ED) is trying to ascertain if certain foreign direct investment (FDI) norms were violated when Etihad took a stake in Jet Privilege Pvt. Ltd (JPPL), Jet Airways’ frequent flyer programme, in 2014.

“The board of directors of Etihad Airways is also against investing further in Jet Airways. The Abu Dhabi-based airline was earlier keen to save their investment, but now their plan is on the back burner," said the first person cited earlier.

Etihad Airways had in May confirmed its interest to reinvest in a minority stake in Jet Airways, subject to conditions. The Economic Times had then reported that Etihad could invest only up to ?1,700 crore in Jet Airways.

(Source: Livemint)

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