(Adds details, updates shares)
NEW DELHI Feb 27 Shares in Jet Airways
surged as much as 19.7 percent on Wednesday after TV channel ET
Now cited unidentified sources as saying Etihad Airways was
close to a deal to purchase a 24 percent stake in the Indian
Abu Dhabi's Etihad has already paid a "token" amount of $70
million, and will likely pay $400 million in the first tranche
of the deal, the channel reported.
A Jet Airways spokeswoman referred Reuters queries on the
report to Etihad. Etihad said it did not have an immediate
Indian TV channels said Etihad had bought Jet's slots at
London's Heathrow airport for $70 million, but did not say
whether that was a part of the stake buy agreement.
Jet shares were up 17.3 percent as of 0831 GMT, after having
risen as much as 19.7 percent earlier in the day. Shares of
smaller rival SpiceJet also surged 9.4 percent to
The Jet-Etihad deal would be the first since India relaxed
ownership rules in September and allowed foreign carriers to buy
up to 49 percent in local carriers, which are battling stiff
competition and high operating costs.
Malaysia's AirAsia Bhd, Asia's largest budget
carrier, also plans to launch a regional airline in India in a
venture with the Tata group, marking a return to aviation for
India's biggest business house, and betting on potential growth
despite near-term issues.
Etihad, launched in 2003, is on a buying spree to compete
with regional rivals Emirates and Qatar Airways. The
Gulf carrier has taken stakes in Virgin Australia and
Aer Lingus and raised its shareholding in Air Berlin
and Air Seychelles.
Top executives from Etihad and Jet met Indian ministers
earlier this month, but the deal faced a set-back later as the
Gulf carrier's chairman told Reuters the deal needs to be
Jet shares have fallen more than 27 percent since then
Etihad will have to find a way around Jet's complicated
shareholding structure before a deal can be finalised.
Tail Winds Ltd, the Isle of Man-based investment vehicle of
Jet founder Naresh Goyal, currently holds 79.99 percent of Jet
According to Indian rules, foreign companies can hold a
maximum 49 percent stake in local carriers, but so-called
non-resident Indians like Goyal are exempted.
Goyal is likely to convert shares owned by its holding
company into his personal stake to comply with foreign
investment regulations, an Indian government source has said.
As a foreign company, Tail Winds cannot engage in share
trades with another foreign company but Goyal can sell his
(Reporting by Anurag Kotokyk, additional reporting by Praveen
Menon in DUBAI; Editing by Rafael Nam and Jeremy Laurence)