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India's Jet Front-Runner For Etihad Investment: Source

Wednesday, 2 Jan 2013 | 6:38 PM ET
A Jet Airways plane approaches Ahmedabad airport.
Sam Panthaky | AFP | Getty Images
A Jet Airways plane approaches Ahmedabad airport.

India's Jet Airways is the front-runner for an investment by Etihad Airways, a senior Indian government source said on Wednesday, adding the Gulf carrier could pay up to $330 million for a 24 percent stake in the Indian company.

A deal is likely in the next 10 days, the government official, who declined to be named as he is not authorized to speak to the media on deals between companies, told reporters.

(Read More: In Gulf Carrier Power Grab, Etihad Is Set on Growth)

"From what I understand, they were talking about 1,500 crore to 1,800 crore (15-18 billion rupees) for 24 percent," the official said.

Etihad, seeking to widen its operations in India, is in the final stages of talks to buy part of either Jet Airways or grounded rival Kingfisher Airlines, the same official had said on Dec. 17. Etihad declined comment and a spokeswoman for Jet Airways said she did not have any information on a possible deal.

Etihad and Jet already have a code-sharing agreement, and a tie-up could make Jet a more formidable competitor to state-owned Air India while strengthening Etihad's position against Dubai-based Emirates Airline, which carries a big chunk of the traffic between India and the Middle East.

(Read More: India's Troubled Airline Sector Running Out of Options)

Cash- and debt-strapped Kingfisher, controlled by liquor baron Vijay Mallya, has been scrambling to find an investor for more than a year and has not flown since the start of October. Its operating licence expired at the end of December.

Jet Airways shares, currently valued at about $920 million, closed 0.3 percent higher on Wednesday ahead of the remarks by the government official.

Jet shares jumped 62 percent between October and December on investor hopes for a deal after India decided to allow foreign carriers to buy stakes of up to 49 percent in local carriers.