Etihad in talks to buy a large stake in Jet Airways following India’s easing of foreign ownership rules

Jet Airways (India) Ltd., the nation’s largest publicly traded carrier, said it’s in talks with Etihad Airways PJSC for selling a stake after the South Asian nation eased airline ownership rules.

“The discussions are in progress but no terms have been firmed up at present,” Mumbai-based Jet said in a stock exchange filing today. The carrier didn’t give a timeline for the talks to conclude.

An agreement with Jet will make Etihad the first foreign carrier to buy into an Indian airline after Prime Minister Manmohan Singh’s government announced the new rules in September. Kingfisher Airlines Ltd., which has halted flights because of a cash crunch, is also in talks with the Abu Dhabi- based operator to sell a stake.

Etihad is in talks to buy 24 percent of Jet for about 16 billion rupees ($294 million), an Indian government official said last month. Etihad is in due diligence with a “couple” of Indian carriers, Chief Executive Officer James Hogan said Dec. 3.

Etihad already has stakes in Virgin Australia Holdings Ltd., Aer Lingus Group Plc and Air Berlin Plc.

Shares of Jet Airways surged as much as 6.7 percent in Mumbai trading and changed hands at 607.80 rupees, up 4.8 percent, as of 2:40 p.m. Kingfisher fell 2.1 percent to 14.84 rupees, after earlier dropping as much as 3.6 percent.

In December, Jet agreed to expand a codeshare pact with Etihad, which operates services to nine Indian cities, including New Delhi and Mumbai. The Indian carrier flies to 125 cities, including Bahrain, Doha, Dubai, Jeddah, Kuwait and Muscat.

Editors: Vipin V. Nair, Anand Krishnamoorth. To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net. To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net.