The board of the Abu Dhabi-based Etihad Airways is likely to meet next week to finalise its Indian investment, CNBC-TV18's Kritika Saxena reported today, quoting sources.
The board is likely to consider proposals by both Jet Airways and Kingfisher Airlines, reported to be vying for the investment.
The government had earlier this year allowed foreign airlines to invest in their Indian counterparts. The domestic aviation sector is starved for funds and most of the airlines are under huge debt burden.
While Jet Airways has a debt of $2.3 billion, the financial position of Kingfisher, which lost its flying lilcence yesterday, is far worse.
It has bank debts of more than Rs 7,000 crore and unpaid interest since January apart from over Rs 1,000 crore in vendor and tax arrears. It also has accumulated losses of nearly Rs 10,000 crore, apart from the salary dues of the past eight months.
According to the CNBC-TV18 report, Etihad-Jet talks are likely to be structured in two parts. Jet promoters, who hold 80 percent in the company through Isle of Man-based Tail Winds Ltd, will sell direct stake in the first tranche, the report said.
Jet will then issue warrants convertible to equity at a later date. Once the deal is complete, Etihad will hold 22-24 percent stake in Jet airways, the sources told CNBC-TV18.
Kingfisher, meanwhile, is likely to present a second revival plan to Etihad. Earlier, the national career of the United Arab Emirates had sought more clarity from Kingfisher on its operations.
Etihad has also asked the Vijay Mallya-owned company to give more clarity on fund infusion from parent United Breweries group.
Earlier, the civil aviation ministry had also asked the airline to provide more clarity on fund infusion. While rejecting the revival plan submitted by the airline ahead of the expiry of its flying licence, the regulator DGCA had asked for written proof about where the funds will come from.
In addition, Etihad also wants Kingfisher to clear all dues ahead of a possible deal and details of talks with DGCA on licence expiry.