Feb. 27 (Bloomberg) -- Jet Airways (India) Ltd. surged the most in more than three years in Mumbai after Bloomberg TV India reported the country’s biggest publicly traded carrier signed a deal with Etihad Airways PJSC to sell a stake.
The stock jumped 19 percent, the most since May 18, 2009, to 534.70 rupees at close of trading in the city. The shares had slumped 11 percent yesterday.
Etihad may purchase a 24 percent stake in the Mumbai-based carrier at 760 rupees 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, according to 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 Pvt. “It also indicates the hard bargain on the deal.”
James Hogan, chief executive officer 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 percent of Jet for about 16 billion rupees ($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. Prime Minister Manmohan Singh’s government in September allowed foreign carriers to buy as much as 49 percent 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 percent holding in Air Berlin Plc and also owns stakes in Air Seychelles Ltd., Virgin Australia Holdings Ltd. and Aer Lingus Group Plc.
Etihad said in its statement that the purchase of the Heathrow slots is part of a sale and lease agreement signed yesterday.
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