Mumbai, Feb 28 (): Jet Airways- Ethihad deal has got through due to which stocks soared 20% to Rs 538 on NSE. Naresh Goyal-promoted Jet Airways agreed to the revised proposal from the Abu Dhabi-based airline Etihad Airways. Jet Airways has agreed to give four director board seats to Etihad. Jet Airways also agreed to give Etihad the right of first refusal and was open to price negotiation.
Jet Airways’ three slots in London Heathrow airport was bought by Etihad for $77 million and leased back to the airline. Reports say that Etihad with four director board members and a 49% stake is out to ensure that any change in policy does not hamper its interests.
The stock had dropped 24% in past six sessions on BSE after Etihad Airways put forth new conditions. The Abu Dhabi-based Etihad Airways new conditions including an option to buy up to 49% stake in the firm, as well as for its representation on the board of the Indian airline, has been agreed.
The stock opened at Rs 500 and hit a high of Rs 505 on BSE. Around 3.26 million shares have already changed hands against an average of 3 million shares traded daily in past two weeks. Etihad took up the matter with Union Minister Anand Sharma on his visit to Dubai. Incidentally the owner of Etihad is the co Chairman of the committee that overlooks $2 million investment in India infra.
It pointed out that Gulf based Kuwait Airways and Gulf Air in 1993 bought a 20% stake in Tailwinds Pvt. Ltd, the firm owned by non-resident Indian Naresh Goyal located in Isle of Maan and held all of Jet Airways stock at the time.
In April 1997, the aviation ministry asked Jet Airways to eject overseas airlines stock since no foreign carriers could invest in Indian airlines. Goyal had no option but to acquire the 40% holding. Similarly Gulf based Etilsat telecom company suffered huge losses due change in policy after 2G scam.