New Delhi: The Jet-Etihad deal is likely to get clearance from the Cabinet Committee of Economic Affairs on Thursday. Etihad Airways is seeking regulatory approval for its planned Rs 2,058 crore stake in Jet Airways.
As per the deal, Etihad will nominate three executives on Jet board. According to reports, Etihad Airline President and CEO James Hogan may be one of the nominees in the Board. The Abu Dhabi-based Etihad Airline has said that it is awaiting a final approval from the Indian authorities for the deal which could enhance its global reach.
The Etihad-Jet deal has got a conditional approval from the Foreign Investment Promotion Board (FIPB) and it needs approval of the Indian Cabinet. The reworked Jet-Etihad deal has reduced the number of Etihad directors on the new airline's board to two from three. But the deal has only got a conditional approval by the FIPB.
One of the conditions include Jet seeking prior approval from the Government of India for any changes in the Share Holders Agreement (SHA) with Etihad. Also, any arbitration would have to be under Indian law and not English law as proposed in the revised SHA submitted by Jet-Etihad to FIPB.
The revised proposal seeks to address the concerns of FIPB and market regulator Sebi with regard to 'effective control' after the foreign direct investment, which will be the largest FDI in the aviation space. However, there will be no change in the shareholding pattern with Etihad picking up 24 per cent, Jet's majority shareholder Naresh Goyal holding 51 per cent and 25 per cent with others, including institutions and individuals. Following the deal India will become the the hub of Jet's commercial and air operations.
The deal will now goes to Cabinet Committee on Economic Affairs for clearance. The Rs 2,058 crore investment could lead to other international airlines investing in India while the passengers will get benefit from Etihad's global network. As the Jet-Etihad hub will be located in Abu Dhabi, passengers will have access to a number of new routes to African cities and US and Europe. With Jet Airways access to low cost fuel, flying could also become cheaper.
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