Etihad Airways is to take a 24% stake in Jet Airways and forge a "strategic partnership" with the Indian carrier.
The Abu Dhabi-based airline is investing $379 million to acquire the equity in Jet. It has also committed $150 million to buying a majority share in frequent-flyer programme Jet Privilege, subject to regulatory and corporate approvals, with commercial agreements expected to close within six months. This is on top of $70 million Etihad paid to purchase Jet's three pairs of Heathrow slots through a sale and leaseback agreement sealed in February.
Via their partnership - which pends the green light from regulators and shareholders - Etihad and Jet will introduce new routes between India and Abu Dhabi, and "combine their network of 140 destinations". Jet will set up a "Gulf gateway" hub in Abu Dhabi.
The partnership will bring "a contribution of several hundred million dollars for both airlines over the next five years", predicts Etihad chief James Hogan.
Jet chairman Naresh Goyal credits the Indian government with "having the foresight to introduce the historic reform of allowing foreign direct investment into civil aviation in India". The nation last year lifted the cap on foreign ownership of local carriers to 49%.
In addition to codesharing and granting passengers reciprocal "earn and burn" rights via their loyalty programmes, the airlines are also targeting synergies and costs savings in fleet acquisition, maintenance, product development and training, and will look to jointly purchase fuel, spare parts, equipment, catering supplies, insurance and technology support. A joint project management office is planned.
"Substantial ownership and effective control" of Jet will remain with Indian nationals, with Goyal, as non-executive chairman, holding 51%.
Jet joins a growing stable of airlines part-owned by Etihad, which in the past 12 months has bought minority stakes in Air Berlin, Air Seychelles, Virgin Australia and Aer Lingus.