Jet Airways (India) Ltd. (532617.BY) has submitted a revised agreement to an Indian regulator to get approval for its long-pending plan to sell a stake to Abu Dhabi’s Etihad Airways P.J.S.C., two people familiar with the terms of the deal said recently.
The new agreement has been filed with the Foreign Investment Promotion Board which examines foreign investment proposals and meets Monday afternoon to take a decision on the deal, the people said. The revised agreement reduces the number of members that Etihad can appoint on Jet’s board, the people added.
Officials at Jet and Etihad declined to comment.
In April, the Indian airline had announced its plan to sell a 24% stake to Etihad for $380 million, but the deal has since been hanging in limbo as Indian regulators have raised questions about who would control the company after the deal is completed.
“We need more details of effective control and ownership,” Arvind Mayaram, India’s economic affairs secretary who heads the Foreign Investment Promotion Board, had told reporters in early June. Mr. Mayaram hadn’t specified what details the board wanted.
In April, Jet and Etihad had said in a news release that “substantial ownership and effective control (of Jet) will remain with Indian nationals.” The statement added that Jet founder Naresh Goyal would be the company’s non-executive chairman, holding a 51% stake.
The original deal had given Etihad the right to appoint three directors to Jet’s board, and to nominate the vice chairman.
However, the revised agreement would allow Etihad to appoint no more than two members to Jet’s board, the people familiar with the deal said. It wasn’t immediately clear if Etihad retained the right to appoint a vice chairman.
The Jet-Etihad deal is a key test of India’s resolve to attract foreign money after it relaxed caps on various sectors last year.
In September, India allowed foreign airlines to own up to 49% in Indian carriers. Until then, foreign carriers had been barred from such investments because India feared financially stronger foreign companies would take control of the Indian carriers.
Most Indian airlines have been incurring losses due to high taxes on fuel, competition, and a decline in passengers. Jet was among the first Indian airlines to try to take advantage of the change in rules.
Jet’s shares briefly touched a low of 388 rupees in afternoon trade Monday before recovering to trade 5% up at 417 rupees on the Bombay Stock Exchange.
–Santanu Choudhury in New Delhi and Rory Jones in Dubai contributed to this article.