Paving the way for the biggest foreign investment in the country's aviation sector, the Cabinet Committee on Economic Affairs (CCEA) after almost six long months of wait, finally gave its nod for $900-million (over Rs 5,300-crore) stake sale deal between Jet Airways and Abu Dhabi-based Etihad Airways on Thursday.
The deal entailing a 24% stake sale by Jet to Etihad, announced in April, had hit an air-pocket after the FIPB deferred the proposal in June citing concerns over the issue of 'effective control' in Jet Airways, especially over a proposal that aimed at the shifting of operations from Mumbai to Abu Dhabi. It’s only a month later that FIPB accorded its approval, but that was post the airline in its revised set of pacts restored the supremacy of the Jet board as the final authority.
However, the Union Cabinet has given a nod to the deal with certain riders, which among other things require Jet Airways and Etihad Airways to adhere to RBI policy guidelines and SEBI regulations, comply with all Indian laws and take prior FIPB approvals for any further changes in the shareholders agreement, commercial cooperation agreement, articles of association, investment agreement and shareholding patterns.
The Jet deal, will see Etihad picking up a 24% stake in Jet for $379 million (about Rs 2,060 crore). Apart from this, the Abu Dhabi-based carrier will hand out the Naresh Goyal-promoted airline $300 million as low-cost debt, and $150 million for a share in Jet's frequent flyer programme , besides paying $70 million for acquiring three slots of Jet at London Heathrow.
Nevertheless, this deal is now expected to result in wider international connectivity for domestic passengers, especially those flying from tier-II cities, as Jet plans to offer international connectivity from 23 cities in the country through the Abu Dhabi hub.
The deal entailing a 24% stake sale by Jet to Etihad, announced in April, had hit an air-pocket after the FIPB deferred the proposal in June citing concerns over the issue of 'effective control' in Jet Airways, especially over a proposal that aimed at the shifting of operations from Mumbai to Abu Dhabi. It’s only a month later that FIPB accorded its approval, but that was post the airline in its revised set of pacts restored the supremacy of the Jet board as the final authority.
However, the Union Cabinet has given a nod to the deal with certain riders, which among other things require Jet Airways and Etihad Airways to adhere to RBI policy guidelines and SEBI regulations, comply with all Indian laws and take prior FIPB approvals for any further changes in the shareholders agreement, commercial cooperation agreement, articles of association, investment agreement and shareholding patterns.
The Jet deal, will see Etihad picking up a 24% stake in Jet for $379 million (about Rs 2,060 crore). Apart from this, the Abu Dhabi-based carrier will hand out the Naresh Goyal-promoted airline $300 million as low-cost debt, and $150 million for a share in Jet's frequent flyer programme , besides paying $70 million for acquiring three slots of Jet at London Heathrow.
Nevertheless, this deal is now expected to result in wider international connectivity for domestic passengers, especially those flying from tier-II cities, as Jet plans to offer international connectivity from 23 cities in the country through the Abu Dhabi hub.
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