New Delhi, Feb. 19: Jet Airways today agreed to give Etihad four seats on its board, while retaining the posts of the chief executive officer and the chief financial officer with itself.
According to sources, the Naresh Goyal-led airline is unlikely to concede Etihad’s demand to give the right of first refusal to the Abu Dhabi-based airline.
They said Etihad had pitched for the right in the share purchase agreement, a move that would cushion the airline if the promoters of Jet Airways partly or completely sold their stake. However, Etihad can only raise its stake in the Indian carrier to 49 per cent as current rules do not allow foreign airlines to pick up a controlling stake.
According to these sources, the two airlines will put together a new team comprising members of both the carriers to formulate global marketing strategies.
Sources in Jet Airways say talks will continue on these issues and, if they fructify, Jet will offer four board seats to Etihad.
The senior management of Jet Airways, including Goyal, is in Abu Dhabi now to finalise the structure.
Etihad has also confirmed that the board will meet to finalise the deal structure, and the due diligence report will be submitted to the board.
The much-awaited deal could also get delayed as Etihad is planning to seek clarity on taxation issues and management control.
On Sunday, Etihad Airways chairman Sheikh Hamed bin Zayed al-Nahayan told the media in Abu Dhabi that the airline needed to revise the deal and it was too early to say when a final agreement would be signed. Sheikh Hamed had said the airline officials would meet commerce and industries minister Anand Sharma.
According to analysts, the delay is because of an absence of clarity on rules governing the number of board seats on an Indian airline that a foreign company can hold.
However, most experts agree that these issues will not affect the proposed deal. They expect the government to clear the proposals of Etihad once it goes to the Foreign Investment Promotion Board.
The Jet Airways deal will be the first foreign investment in India’s aviation sector after the government relaxed ownership rules last September.