Shares in the Indian carrier Jet Airways tumbled by up to 8.9 per cent yesterday after reported comments from the chairman of Etihad Airways saying the Abu Dhabi airline needed to "revise" a potential deal.
Etihad is looking at buying a stake in Jet and shares in the carrier have surged since news of a potential deal emerged.
Stock at the beginning of this month was up more than 80 per cent compared with levels at the beginning of November in trading on the Bombay Stock Exchange.
When asked whether a deal was likely to be signed by next month or April, Sheikh Hamed bin Zayed Al Nahyan, is reported to have said: "I don't know Ö We need to revise it."
He was speaking on the sidelines of the International Defence Exhibition and Conference (Idex) on Sunday in Abu Dhabi.
"It's too early to decide," he was quoted as telling Reuters. "We need to talk with the Indians about other issues Ö including this."
James Hogan, the chief executive of Etihad, said this month that the airline was presenting a proposal for a deal with Jet to its board and would make a decision on whether to invest in the carrier within the next few weeks. Expectations for the past couple of weeks in India have been that an announcement is imminent.
The Indian government opened up its aviation sector to foreign direct investment by overseas carriers last September, allowing foreign airlines to buy stakes of up to 49 per cent.
The move comes amid a challenging period for Indian airlines as they face competition from other carriers at home and abroad, high fuel prices and taxes.
This month, Jet posted a profit of 850 million rupees for the quarter between October and December, compared with a loss of more than 1 billion rupees a year earlier.
At close of trading, Jet Airways shares were down 7.6 per cent at 570.7 rupees a share.