Mumbai: Etihad Airways’ chief executive James Hogan and finance chief James Rigney will be two of three directors on Jet Airways (India) Ltd.’s board after the Abu Dhabi airline acquires close to one-fourth of Jet’s shares, a senior executive at the Indian carrier said on Monday.
The third executive hasn’t been decided yet, he added, speaking to The Wall Street Journal on condition of anonymity.
Jet currently has seven directors on its board, including its chairman, Naresh Goyal. The executive said the board will have 10 or 11 members total. An Etihad spokesman didn’t immediately respond to queries.
Board representation is one of several powers to be given to Etihad as part of the recently announced deal under which it will buy 24 per cent of Jet’s shares for about $380 million.
Earlier in the day, Jet announced it will also give a right of first refusal to Etihad on further sale of shares. This means once Etihad is a stakeholder in Jet, the airline will have the right to shoot down any of Jet’s plans for further share sales.
The deal, announced last week, is the first such transaction after the Indian government last September allowed foreign airlines to purchase up to a 49 per cent stake in Indian carriers. Previously, all foreign investors except airlines were allowed to have up to that much stake in a carrier.
The Jet-Etihad deal will make the combined entity a fierce competitor to Emirates and Qatar Airways in the lucrative India-UAE sector. There are close to 500 weekly flights between India and the Persian Gulf country, out of which Emirates operates 185, Qatar flies 95 and Etihad flies 63.
The UAE has proposed investing $2 billion on infrastructure projects in India, its biggest trading partner. After the Jet-Etihad deal was announced, the government said it will more than triple the number of flight seats allowed to be sold between the two countries.
While the deal gives Etihad access to India’s international traffic, it gives Jet cash to retire part of its close to $2 billion of debt.
In its announcement, Jet said Etihad won’t have management control in the company but can nominate a vice chairman.
Also as part of the deal, Tailwinds Ltd., the holding company that now controls Jet, will sell shares to Etihad and transfer the remaining to Goyal, who will then own a 51 per cent stake in the company. Tailwinds, owned by Goyal, currently holds a 79.99 per cent stake in Jet and will have no holding in the company after the deal.
gulf news