Back in the day, Jet Airways got their one hand in the pockets of Etihad Airways, where the airline has sold 24% of the airline in the past, and 51% of the JetPrivilege frequent flyer program. Now, it is getting close to Delta and their transatlantic friends in KLM/Air France/Virgin Atlantic. What is more, even Jet Airways’ new CEO is from Delta.

So, the logical next step is the airline to make a joint venture with Delta. But airline JVs work in a way where companies remain independent and they make joint venture on specific markets/routes. For instance, American Airlines/British Airways and Iberia have a JV on the transatlantic routes. This means they share the costs and the revenues of all the flights on these routes. This helps airlines become metal neutral and sell flights on their JV partners as well. This is an envisioned and ideal scenario for Jet Airways, who perhaps does not want to operate in the US market on its own, and its partner Delta does not want to operate in the Indian market on its own.

However, there seems to be a different sort of Joint Venture in the making. The airline reports today that they are in a preliminary talk with Delta for a fresh infusion of INR 2000 crores in the Indian carrier, and this will help Delta own 24% of the Indian carrier if it fructifies.

As per a flurry of tweets first seen on CNBC TV18’s Twitter feed, it seems this infusion will impact Etihad’s 24% stake in the company, and Etihad will also infuse fresh funds into Jet Airways to keep their stake at 24%. Last I checked, Jet Airways’ holdings were as follows:

• Naresh Goyal: 51%
• Etihad Airways: 24%
• All other individual & corporate: 24%

With this infusion, which will clearly not be a buyback from the market or maybe a dilution of Etihad’s holdings, I’m wondering if finally the Indian promoter Mr. Goyal would be going below the majority 51% mark in this case? Of course, this is too early to find out, since such deals could take months to firm up. And perhaps Jet Airways does need the money. Because how would they finance their next round of growth or pick up their falling standards these days? The airline hasn’t ordered or bought any new planes in years. Their old planes are wearing out and they are no longer at the cutting edge of service and product that they used to be 10 years ago.

Bottomline

I’ll get the popcorn out. This should be interesting. Etihad Airways and Delta, where Delta truly madly deeply dislikes the Middle Eastern Carriers, sitting on the same board of a carrier in a third part of the world both of them have no real say over. What an interesting combination this is going to be. After all, Delta thinks they should be owning this part of the world and so does Etihad.

Where do you think this interesting transaction will go?