Jet Airways - Etihad Deal Gets Murkier

It seems that the Jet Airways and Abu Dhabi based Etihad deal is getting tangled into new sort of issues every progressing day. Now in a recent news report, BJP demanded that the government order a CBI inquiry monitored by the Supreme Court to find out the manner in which the Jet-Etihad deal was carried out in “half-cooked” and “objectionable” manner.

According the reports BJP alleged that, this deal is mired in all kinds of controversies. According to BJP, the manner in which the deal was concluded two days after the bilateral with the UAE was signed and assigning them 37,000 additional seats clearly indicates that these two private parties namely Jet Airways and Etihad were fully aware of what the government was going to do. BJP alleged that the deal was “predicated” on the increase in number of seats to be made available.Apart from the above allegations, a senior BJP leader also alleged that, given the kind of agreement which the two aviation companies have concluded, in which there will be members on the board much in excess of what 24 per cent entitles them to, is raising all kinds of concerns. Considering all these factors he has asked that, the government should order a CBI inquiry monitored by the Supreme Court to probe the manner in which this deal has been done.

However the Aviation Ministry has denied all the allegations saying that those opposing it were "long on politics and short on facts".Though the Aviation ministry has responded, the matter is getting complicated as politicians are seeking a review. As a result we don’t think it will come to a conclusion any time soon. We had also stated in our earlier update on June 19th 2013 Jet Airways – Etihad: Turbulent Times Again (http://www.dsij.in/article-details/articleid/7701/jet-airways-%E2%80%93-etihad-turbulent-times-again.aspx), that there is much under wraps and hence one should avoid the stock at current levels. 

Now from here on also, the deal may get delayed. We are of the opinion that, Etihad will not wait forever for things to get cleared. Also, it is not encouraging for the other foreign investors to invest in India. They will think twice before investing in India. Hence we do not see any sunny days for Jet Airways soon. Avoid the stock at current levels.