Indian carrier Jet Airways on Thursday confirmed that it was in talks with Abu Dhabi's Etihad Airways over a potential stake sale following media speculation.
Any deal could see Abu Dhabi-based Etihad Airways take a 24 percent stake in Indian carrier Jet Airways for up to US$330m and is expected to be concluded within ten days, it was reported earlier in the day.
"Various structures are being explored by the legal and commercial teams," Jet said regarding the possible deal in a statement to the Bombay Stock Exchange on Thursday.
Etihad has been in talks with both Jet and Kingfisher Airlines in recent months, but given the latter's compromised financial status, Jet is favourite for a deal which could amount to between INR1,500 crore to INR1,800 crore (US$280m to US$330m).
An Indian aviation ministry source told financial paper Business Standard that although Etihad is yet to make its decision, Jet is clear frontrunner for the deal which would mean a fresh injection of capital to help cut its debt, which stood at US$600m in November last year.
That figure pales in comparison to the estimated US$2.5bn debts of rival Kingfisher, which led to the airline being grounded in October last year and the loss of its operating license at midnight on December 31.
The Indian government late last year passed legislation allowing for the first time foreign airlines to invest in Indian's domestic civil aviation industry, leading to speculation Gulf carriers would look to buy up stakes in airlines including Jet, Kingfisher and low-cost operator SpiceJet.
Any deal with Jet would strengthen Etihad's position against Dubai-based Emirates Airline. It would also improve Abu Dhabi’s traffic between India, now standing at 119 weekly flights - a figure dwarfed by Dubai’s 352 weekly flights.
Etihad has recently made a number of acquisitions, including a 40 percent stake in Air Seychelles, and an increase in its shareholding in airberlin from 2.99 percent to 29.21 percent in December 2011. The deal with airberlin was expected to bolster revenue for both airlines by €45m in the first year, giving Etihad access to 33m new passengers across Europe.
Air Seychelles has since increased its international schedule with flights to Abu Dhabi Hong Kong, and increased frequencies to Johannesburg and Mauritius.
Etihad also owns a 10 percent stake in Virgin Australia and just under 3 percent of Ireland's Aer Lingus.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.