London: Jet Airways surged the most in more than three years in Mumbai trading after Bloomberg TV India reported the country's biggest publicly traded carrier signed a deal with Etihad Airways to sell a stake.
The stock jumped as much as 20 per cent, the most since April 2009, to Rs537. The shares had slumped 11 per cent on Tuesday.
Etihad may purchase a 24 per cent stake in the Mumbai-based carrier at Rs760 a share, Bloomberg TV India reported. A deal will make the company the first foreign airline to buy into an Indian carrier since the government eased investment rules in September.
Etihad said in a statement its talks with Jet Airways for an investment continue to progress. The airline bought the Indian carrier's three pairs of slots at Heathrow airport for $70 million, according to the statement.
Ragini Chopra, a spokeswoman for Jet Airways, declined to comment on the report about stake sale. Etihad will also give a five-year loan of $400 million to Jet Airways to help repay debt, says the Bloomberg TV India report.
"It's a surprise that Etihad is extending a soft loan to Jet," said Arun Kejriwal, director at Kejriwal Research & Investment Services. "It also indicates the hard bargain on the deal."
James Hogan, chief executive of Etihad, and Jet Airways chairman Naresh Goyal met Indian ministers last month amid talks for the stake sale. Etihad, the Middle East's third-largest airline, is in discussions to buy 24 per cent of Jet for about Rs16 billion ($298 million), an Indian government official said in December.
A stake in Jet will help Etihad tap into one of the fastest-growing aviation markets in the world, where air travel is forecast to triple by 2021. Indian Prime Minister Manmohan Singh's government in September allowed foreign carriers to acquire as much as 49 per cent of local airlines.
State-owned Etihad has invested in smaller operators to help feed long-haul flights and turn its home emirate into a hub for intercontinental travel.
It has a 29 per cent holding in Air Berlin and also owns stakes in Air Seychelles, Virgin Australia and Aer Lingus.
Etihad said in yesterday's statement that the purchase of the Heathrow slots is part of a sale and lease agreement signed on February 26.