Jet Airways said its discussions with Etihad are in progress but no terms have been firmed up at present and various structures are being explored by the legal and commercial teams

Mumbai: The first investment by a foreign carrier in an Indian airline could be on the anvil with Jet Airways on Thursday announcing it was in talks with Abu Dhabi-based carrier Etihad for a possible stake sale, reports PTI.

"Jet and Etihad are in a discussion regarding a potential investment by the latter in the former... these discussions have commenced recently pursuant to the liberalised foreign direct investment (FDI) policy which permitted foreign investment in the shares of an Indian airline," Jet Airways informed the Bombay Stock Exchange.

"The discussions are in progress but no terms have been firmed up at present. Various structures are being explored by the legal and commercial teams," it said in its filing.

Following the statement, shares of Jet Airways rose sharply by about 7% to Rs618.70.

This is the first time that Jet has admitted holding talks with Etihad for potential investment since the FDI policy was amended by the government in September 2012 to allow foreign airlines pick up upto 49%equity in an Indian carrier.

Both airlines are learnt to have appointed global consultants as they want the investments to be on a sound footing, given the high operating costs in India, with reports saying the Gulf carrier's Board would meet soon to decide on the matter.

Jet said it had not yet sought any regulatory approval as a deal with Etihad was still to be firmed up. An appropriate announcement would be made upon finalisation of the terms of the investment with Etihad as per legal and regulatory requirements, the BSE filing added.

When contacted, Etihad spokesperson Thomas Clarke told PTI on phone from Abu Dhabi: "Our position (on the issue) remains the same as we have stated earlier."

Few weeks ago, Etihad had said it "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. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements," the Gulf carrier said.

Etihad has in the past two years picked up stake in several international carriers like Virgin Australia, airberlin, Air Seychelles and Aer Lingus.

The Jet statement also said that no time-line could be set for arriving at an agreement "considering the complexity of transnational transactions such as this, and the complexity of the legal requirements of the regulatory structure."

Jet's clarification came after reports that Etihad may buy 24% stake for about Rs1,800 crore. Similar reports have also appeared about Etihad being in talks for potential investment in Kingfisher Airlines.

Sources said that apart from stake sale, Jet and Etihad are expected to have a marketing agreement along with sharing of some flying slots under the air traffic rights.

When Etihad was set up in 2003, it had sought the help of the Naresh Goyal-owned carrier to set up its systems and Jet had given assistance with its specialists in various fields of aviation operations. Unconfirmed reports had then said Goyal had also invested some money in the Gulf carrier.

A major reason for Goyal to dilute part of his shareholding in Jet from 80% has been the order of the Foreign Investment Promotion Board (FIPB) to bring it down to the regulatory levels.