Press Esc to close
Saturday 13 February 2016
News updated at 3:15 AM IST
Weather
Max: 32°C
Min : 19°C
In Bengaluru
Partially cloudy

Jet wins key approval for Etihad deal, with conditions

NEW DELHI, Jul 29, 2013, (Reuters) -
Jet wins key approval for Etihad deal, with conditions. Reuters Image

The foreign investment regulator gave conditional approval on Monday to a $379 million deal by Abu Dhabi's Etihad Airways to buy a stake in Jet Airways(JET.NS), paving the way for more acquisitions in the domestic aviation sector.

"We have approved with some conditions," Economic Affairs Secretary Arvind Mayaram told reporters after a meeting of the Foreign Investment Promotion Board (FIPB).

He did not elaborate.

Etihad's purchase of 24 percent of Jet is the first such deal since the government allowed foreign airlines to own up to 49 percent of Indian carriers last September.

It bodes well for more foreign investment into the Indian aviation sector where most carriers are burdened with heavy debts and rack up losses mainly due to the high cost of fuel.

For foreign investors, buying a stake in an Indian carrier grants access to one of the world's fastest growing domestic airline markets which has plenty of untapped potential, especially in services to smaller Indian cities.

Low-cost carrier SpiceJet (SPJT.BO) has received interest from various unidentified potential investors, while fellow budget airlines GoAir and IndiGo have also been identified as potential targets.

The Jet-Etihad deal still has to obtain the approval of the capital markets regulator as well as a ministerial investment panel before the airlines can proceed.

The deal provides Jet with a deep-pocketed global partner as well as cash to help pay off debts. Etihad, which is on an acquisitions drive, will benefit from Jet's Indian connections.

Ahead of Monday's announcement, Jet shares had jumped nearly 3.7 percent, taking their gains in the last two sessions to nearly 22 percent on speculation the deal would be approved.

EFFECTIVE CONTROL

Last month, the FIPB had said it wanted more details on who would be effectively in control of Jet Airways after the deal before making a decision.

The deal won regulatory approval after a revised shareholder agreement decreased Etihad's presence on the board of Jet, according to a document seen by Reuters, addressing government concerns that the Abu Dhabi carrier appeared to be taking control of the Indian airline.

Etihad will now take two seats on the board, which will have up to 12 members, one less than initially planned.

Jet's founder group will appoint four board members and will have the right to nominate the chairman, whereas Etihad will appoint a vice chairman, according to the document.

Opposition politicians have opposed the deal on grounds that a bilateral accord between India and the United Arab Emirates increasing number of seats per week favoured Etihad and also on security concerns.


Go to Top

Photo Gallery
Actress Priyanka Upendra  after inaugurating three days wedding essentials collection...

Actress Priyanka Upendra after inaugurating three days wedding essentials collection...

A woman holds the hand of a boy as they cross a temporary bridge made of bamboo on a canal...

A woman holds the hand of a boy as they cross a temporary bridge made of bamboo on a canal...

NSUI Workers pay tribute candle light tribute to Siachen soldier Lance Naik Hanamanthappa ...

NSUI Workers pay tribute candle light tribute to Siachen soldier Lance Naik Hanamanthappa ...

Sand artist Sudarsan Pattnaik pays tribute to Lance Naik Hanumanthappa Koppad...

Sand artist Sudarsan Pattnaik pays tribute to Lance Naik Hanumanthappa Koppad...

Narendra Modi shakes hands with Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi...

Narendra Modi shakes hands with Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi...

Gold medalist Neeraj Kumar, silver medalist Gurpeet Singh and bronze medalist Mahender Singh...

Gold medalist Neeraj Kumar, silver medalist Gurpeet Singh and bronze medalist Mahender Singh...

Kavita Raut and Niotendra Singh Rawat of India shake hands during the 12th South Asian games 2016...

Kavita Raut and Niotendra Singh Rawat of India shake hands during the 12th South Asian games 2016...

Women Indian hockey players (blue )celebrate after scoring a goal against Srilanka (red ) during...

Women Indian hockey players (blue )celebrate after scoring a goal against Srilanka (red ) during...

Women hockey final match played between India(blue ) and Srilanka (red ) during the 12th South...

Women hockey final match played between India(blue ) and Srilanka (red ) during the 12th South...

Indian shooter, Chain Singh celebrates after winning gold medal in the 10m Air Rifle Men's final...

Indian shooter, Chain Singh celebrates after winning gold medal in the 10m Air Rifle Men's final...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523