The deal between Jet Airways and Etihad got the clearance from the Foreign Investment Promotion Board (FIPB) on Monday,after concerns over effective control in the hands of Etihad and change in place of business were addressed.
The deal for a 24 per cent stake sale to Etihad,which was announced by Jet Airways in April this year,was not cleared by the FIPB in its meeting held in June.
The deal was put on hold after the civil aviation ministry raised concerns over shift in place of business and corporate affairs ministry raised objection over effective control in the airline after the deal.
The airline,in the revised agreement,restored the supremacy of the board by making its authority ultimate.
With the board becoming the ultimate authority,the concerns of effective control fades away. The chairman also gets the right to vote and power to veto, said a senior civil aviation ministry official.
The other concerns on the change in the place of business are also taken care of by converting the cooperation board into a committee that will only have an advisory role.
The committee can give in recommendations and the board will have the ultimate authority to accept it or not. This is very different from the earlier set up,where the decisions were taken by the cooperation board, the official said.
This deal will now need clearance from the Cabinet Committee on Economic Affairs. Analysts believe that Etihad will play a major role in the operations of the new company.
I see Etihad having a major role in Jets operations and management even though Shareholders Agreement has been revised. Earlier in 2008-09,W L Ross in SpiceJet had very significant role in SpiceJets strategy and future direction even with under 15 per cent share holding and one board seat, said Kapil Kaul,CEO,Centre for Asia Pacific Aviation,a consultancy.