The government has allowed Etihad Airways to acquire a 24% stake in Jet Airways, officially making the two airlines the first beneficiaries of a rule change last year that allowed foreign carriers to own up to 49% in India’s airlines.
Earlier this week, the two airlines received a go-ahead from the country’s markets regulator, Sebi. It is yet to get a nod from the Competition Commission of India that regulates competitive practices. A senior executive at Jet Airways said that a detailed expansion plan, which includes connecting 20 Indian cities to its partner’s global hub Abu Dhabi, will be announced later this month.
On April 24, Jet announced it plans to sell a 24% stake to Abu Dhabi-based Etihad for $379 million. The deal will give Jet the much-needed cash to retire debt and buy planes. Further, it will be able to access Etihad’s vast global network. Etihad, for its part, will gain a stronger foothold in India compared to its competitors Emirates and Qatar Airways. Naresh Goyal, the promoter of Jet, currently holds about 66% while Tailwinds, a holding company, has just over 9%. After the deal, Goyal will hold 51%, Etihad 24% while the rest will be with the public. All listed Indian companies have to maintain a 25% public shareholding.
After the announcement in April, the deal experienced considerable turbulence as the government had issues with Jet-Etihad’s original shareholding agreement as the minority partner had considerable powers.
In June, Jet implemented three key changes in the agreement, the most important being to cut Etihad’s nominees on Jet’s board to two from three. Recently, the airline made further changes to the proposal in response to suggestions from FIPB.
Immediately after the deal was announced, the number of weekly seats allocated between India and Abu Dhabi was increased to 53,000 seats per week from 13,300 per week now.
According to the latest commercial agreement between the two airlines, Jet’s immediate expansion plan includes adding services between Abu Dhabi and eight Indian destinations, including Ahmedabad, Mumbai, Delhi, Kochi, Chennai and Trivandrum, and six new destinations in the country. It also plans to start new flights from India to North America, via Abu Dhabi.
The airlines have appointed Seabury Group to carry out a 10-year market study on demand between India and the Gulf. Based on the report, Jet will order new planes for its expansion. The airline, which currently has a fleet of 100 planes, has already sought the civil aviation ministry’s approval for placing an order for 50 Boeing Max 737 planes, which it wants to induct to its fleet between 2018 and 2020.
Earlier this week, the two airlines received a go-ahead from the country’s markets regulator, Sebi. It is yet to get a nod from the Competition Commission of India that regulates competitive practices. A senior executive at Jet Airways said that a detailed expansion plan, which includes connecting 20 Indian cities to its partner’s global hub Abu Dhabi, will be announced later this month.
On April 24, Jet announced it plans to sell a 24% stake to Abu Dhabi-based Etihad for $379 million. The deal will give Jet the much-needed cash to retire debt and buy planes. Further, it will be able to access Etihad’s vast global network. Etihad, for its part, will gain a stronger foothold in India compared to its competitors Emirates and Qatar Airways. Naresh Goyal, the promoter of Jet, currently holds about 66% while Tailwinds, a holding company, has just over 9%. After the deal, Goyal will hold 51%, Etihad 24% while the rest will be with the public. All listed Indian companies have to maintain a 25% public shareholding.
After the announcement in April, the deal experienced considerable turbulence as the government had issues with Jet-Etihad’s original shareholding agreement as the minority partner had considerable powers.
In June, Jet implemented three key changes in the agreement, the most important being to cut Etihad’s nominees on Jet’s board to two from three. Recently, the airline made further changes to the proposal in response to suggestions from FIPB.
Immediately after the deal was announced, the number of weekly seats allocated between India and Abu Dhabi was increased to 53,000 seats per week from 13,300 per week now.
According to the latest commercial agreement between the two airlines, Jet’s immediate expansion plan includes adding services between Abu Dhabi and eight Indian destinations, including Ahmedabad, Mumbai, Delhi, Kochi, Chennai and Trivandrum, and six new destinations in the country. It also plans to start new flights from India to North America, via Abu Dhabi.
The airlines have appointed Seabury Group to carry out a 10-year market study on demand between India and the Gulf. Based on the report, Jet will order new planes for its expansion. The airline, which currently has a fleet of 100 planes, has already sought the civil aviation ministry’s approval for placing an order for 50 Boeing Max 737 planes, which it wants to induct to its fleet between 2018 and 2020.
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