India's Jet Airways is in talks to sell part of the company to Etihad Airways, according to a statement to the Bombay Stock Exchange yesterday.
The news follows media reports of unofficial briefings by Indian government sources, stating that Jet was seeking to sell up to 24 per cent of the airline for US$330 million (Dh1.21 billion).
Jet's shares jumped more than 6.4 per cent at one point during the day. The stock has risen 65 per cent since India relaxed its ownership rules in September, allowing foreign airlines to buy up to a 49 per cent stake in local carriers.
"Jet and Etihad are in a discussion regarding a potential investment by the latter in the former," Jet said in its filing to the stock exchange.
"These discussions have commenced recently pursuant to the liberalised FDI [foreign direct investment] policy which permitted foreign investment in the shares of an Indian airline.
"The discussions are in progress but no terms have been firmed up at present.
Various structures are being explored by the legal and commercial teams and care being taken to ensure that all the Indian regulatory requirements are fully complied with."
Jet said there could not be a firm timeline as to the progress of the negotiations "because of the complexity of transnational transactions such as this and the complexity of the legal requirements of the regulatory structure.
"Since no agreement has been reached with Etihad as yet, no regulatory approvals have been sought at present."
James Hogan, Etihad's president and chief executive, has said in the past that it is the airline's policy to extend its reach into India and other Asian markets.
Etihad has already expanded globally through stake purchases in Air Berlin and Virgin Australia.
Etihad, which already has a code-sharing agreement with Jet, declined to comment on yesterday's developments. At close on the Bombay Stock Exchange, Jet stood at 6.06 rupees, giving the airline a market cap of 52.39 billion rupees (Dh3.52bn).
If the speculative price of $330m for 24 per cent of Jet Airways is accurate, that would see Etihad having to pay a premium of more than 15.5 per cent for the stake at Thursday's prices.