Jet-Etihad deal: Investment board to look at re-worked agreement today NDTV | Reported By: Sandeep Phukan | Updated On: July 29, 2013 15:46 (IST) The Foreign Investment Promotion Board or FIPB will today look at a reworked agreement on the Rs. 2058-crore Jet-Etihad deal, which proposes a sale of 24 per cent stake in India's Jet Airways to Abu Dhabi's Etihad Airways. In June, the board had sought more details on who would have "effective control." In major changes that Jet Airways has reportedly made to the shareholders agreement to win the FIPB's approval, Etihad will now have two directors on the airline board and not three as proposed earlier. Jet Airways will have four directors.
There will also be six independent directors on the 12-member board and appointments at senior levels will be decided by a majority in the board of directors, the revised agreement proposes in an attempt to address the fear that Jet will lose effective control to Etihad. Commercial operations and air operations of the airline will remain in India. All foreign appointments will be made after security clearance by India. Shares in Jet shot up as much as 10 per cent, but closed off the day's high at Rs. 412.20 gaining over 4 per cent. Jet shares have been swung wildly to any news regarding the deal. They fell sharply in June when FIPB withheld an approval, but have been gaining for the last two sessions. If the deal does get FIPB clearance today, it will go to the Cabinet Committee on Economic Affairs (CCEA) and also to the Competition Commission of India (CCI) for approval. The deal was wrapped up in April, but political concerns and also scrutiny by market regulator Securities and Exchange Board of India or Sebi have delayed it since. The FIPB had put off a decision on June 13, after several government agencies raised questions about who would effectively control the airline. Sebi had raised concerns that the deal (in its original form) would have given Etihad 'control' over Jet with only 24 per cent stake. The deal has also been under intense political scrutiny. Several Opposition members of Parliament have written to the Prime Minister alleging that the government has gone of its way to sweeten the deal for Etihad, which is UAE's national carrier. They point to a bilateral agreement that the Civil Aviation Ministry signed with Abu Dhabi - on same day that the two Airlines announced their deal - to increase 36,000 seats on the India-Abu Dhabi route. The critics argue that a bulk of these seats will be used by Jet and Etihad and will put other airlines at a disadvantage. The suggestion by the Prime Minister's Office that the Cabinet clear the deal has reportedly upset Civil Aviation Minister Ajit Singh, whose Rashtriya Lok Dal is a UPA ally. He had met UPA chairperson and Congress president Sonia Gandhi reportedly to register his dissatisfaction. The deal is the first since the Government allowed 49 per cent foreign participation in India's airline sector in September 2012. It would help Jet Airways, deeply in the red, to pay off debts.