Shares of Jet Airways rose Friday, a day after the cabinet approved a proposal for 24 percent stake sale in the Indian passenger carrier to Abu Dhabi-based Etihad Airways.
The company's scrip at the Bombay Stock Exchange (BSE) rose to 3.50 percent or 13.55 points around 10.30 a.m. at Rs.400.15 from its previous close of Rs.386.60 Thursday.
On Oct 3, the Cabinet Committee on Economic Affairs (CCEA) gave nod to the deal between the two airlines, paving the way for the first foreign capital by an international passenger carrier into a domestic one.
"The Cabinet Committee on Economic Affairs today (Thursday) gave its approval to the proposal of Etihad Airways for subscribing 2,72,63,372 equity shares of Jet Airways," the CCEA said in a statement.
"The Foreign Investment Promotion Board (FIPB) has recommended the proposal. The approval would result in foreign investment amounting to Rs.2,057.66 crore in the country."
The deal was announced on April 24, nearly eight months after the Indian government permitted international airlines to invest into domestic passenger carriers. Jet Airways had announced a 24 percent stake sale to Etihad Airways.
The deal also comes on the back of an approval given by the stock market regulator Securities and Exchange Board of India (SEBI), following an amended share holding agreement between the two airlines.
The deal is expected to garner around Rs.2,058 crore ($379 million) for Jet Airways, which will enable the company to service its debts and provide passengers better connectivity.
Facing tough operating conditions in India due to high interest and fuel cost coupled with a general economic slowdown, the company reported a net loss for the first quarter of 2013-14.
The Jet Airways reported a net loss of Rs.485.50 crore for the year ended March 31 as compared to a net loss of Rs.1,236.10 crore in 2011-12.