MUMBAI: Shares in Indian carrier Jet rose as much as 19 percent Friday on hopes a government panel may approve a deal allowing Abu Dhabi-based Etihad to acquire a stake in the airline.
The deal, through which Etihad Airlines would hold a 24 percent Jet stake, was announced in April but is yet to be cleared by India amid concerns about ownership control.
India's Foreign Investment Promotion Board (FIPB), a government body, had said it would meet next Monday, when the Jet-Etihad agreement was expected to be discussed.
"Jet shares have risen on the hope the deal could be cleared," said an aviation analyst at a Mumbai-based brokerage, asking not to be named.
The agreement, however, would still need the approval of India's stock market regulator and the national home ministry to take effect.
Jet shares jumped as much as 19.35 percent to a day's high of 402 rupees, but then retraced some of their gains to trade up 13 percent at 380.9 rupees.
Several ministries have objected to the Rs. 20.6-billion ($349 million) deal — the largest foreign investment proposal in India's aviation sector — over what the agreement would mean for control of Jet as well as over bilateral plans to hike flights between India and Abu Dhabi.
The Indian concerns stem from the Jet-Etihad investment proposal which says Jet's operations headquarters would be shifted to Abu Dhabi and be subject to UAE laws, according to media reports.
Jet is currently headquartered in India's financial city, Mumbai.
There is speculation another strategic investor may be brought into the deal, the analyst told AFP, which could ease Indian fears that the agreement was being structured to Etihad's advantage.
The deal would be the first overseas investment in an existing Indian carrier since New Delhi eased curbs to allow foreign firms to take up to a 49 percent stake in the country's airlines.
Jet and Etihad officials were not immediately available for comment.
Media reports this month said India's government is seeking "an assurance" that Jet will comply with local laws and its foreign investment policies.
Etihad's plan for a stake in Jet would allow the Indian airline to reduce its hefty debt and expand its global reach by using the UAE airline's network.
India's aviation sector, once vaunted as a symbol of the nation's economic vibrancy, has seen its fortunes fade in the face of multiple problems including fare rivalry, a slowing economy, rundown infrastructure and high airport charges.
Jet shares leap 19% on Etihad deal approval talk
