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Jet-Etihad deal approved by shareholders

New Delhi:

Jet Airways shareholders today approved the 24 per cent stake sale to Etihad Airways for Rs 2060 crore.

Jet Airways chairman Naresh Goyal told shareholders the deal will improve the company's profitability and reduce costs.

"Etihad investment will help us to deleverage and grow in a sustainable manner," Mr Goyal said while addressing Jet Airway's shareholders at an Extra Ordinary General Meeting (EGM) convened to seek their approval for the Etihad deal.

At the EGM, shareholders approved the proposed issue of shares on a preferential basis to Etihad.

However, these shares would be allotted after completion of all regulatory approvals.

The deal is being looked into by Competition Commission of India (CCI) and Securities and Exchange Board of India (Sebi) among other regulators.

"The commercial agreement with Etihad will help us to expand network, reduce costs and increase profitability," he added.

The company, however, deferred a proposal to amend its Article of Association, approval for which was also scheduled to be sought at today's EGM.

Mr Goyal said the resolution to amend the Article of Association would be taken up after getting necessary
regulatory approvals for the deal.

Experts say Jet would benefit from strategic expertise, cheap financing and possible fuel import benefits in addition to the capital injection thanks to the deal.

At 1:00 pm, shares of Jet Airways were trading 2.97 per cent down.

The company is due to announce its quarterly results today.

The Jet-Etihad deal is India's first major aviation investment by a foreign airline after the government eased ownership rules in September.

"It (the deal) is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years," James Hogan, Etihad's chief executive had said after the deal came through.

As part of the agreement Jet will establish a hub in Abu Dhabi and expand its reach through Etihad's global network while the airlines will also expand existing operations and introduce new routes between India and the Gulf.

The deal will see Jet Airways offload 27.26 million shares in a preferential offer to Etihad at Rs 754.74 apiece.

(With inputs from agencies)

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