Etihad Airways is reported to be in talks to buy a stake in India's Jet Airways, according to un-named Indian government sources being quoted in the country's press today.
"The due diligence process is underway and there is lot of activity on that front. But when a final deal will be struck cannot be said," India's Economic Times reported, quoting a top source from the civil aviation ministry.
"Both the sides have appointed consultants as Etihad wants to make sure that they have a sound investment in the country as cost issues remain a concern about airline companies in India," the source continued.
The speculation sent Jet Airways shares soaring more than 18 per cent to 598.80 rupees (Dh39.5) and was at 564.75 rupees at mid-morning trading in Mumbai.
Etihad Airways did not confirm or deny the speculation, but issued a statement.
"Etihad Airways has identified equity investments in other airlines as an important evolution of its successful partnership strategy. Such investments will be made where Etihad Airways believes the commercial prospects are strong, where there are like-minded business philosophies, and where such commitment will be welcomed," said the airline.
"The Indian aviation industry offers tremendous potential, with significant passenger movement on domestic and international sectors. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements."
Jet Airways said, "We do not have adequate information at this stage to comment on this issue."
The Indian government amended legislation in September to allow foreign investors a stake of up to 49 per cent in Indian airlines, and industry analysts believe such a stake would fit Etihad's expansion plans.
"A deal will help the Indian company tap the Gulf carrier's global network, while Etihad can benefit from rising travel demand in India. Potentially it can be a win-win situation," said the consulting company, CAPA Centre for Aviation. "India is one of the fastest-growing markets in the world, which Etihad can't ignore. And for an Indian carrier, a partnership with Etihad is like plugging into a growing network in Europe, Africa and North America."
Etihad already has a 10 per cent stake in Virgin Australia, a 30 per cent stake in Germany's Air Berlin and a three per cent of the former Irish national airline, Aer Lingus.