India's debt-laden Kingfisher Airlines has denied a newspaper report that it had reached an agreement on selling a 48 per cent stake to Etihad Airways.
Kingfisher is in discussion with various investors, including Etihad, for equity investments in the company, but matters are merely at negotiation stages, it said in a statement to the stock exchange.
India changed its foreign direct investment (FDI) policy in September to allow foreign carriers to buy stakes of up to 49 per cent in domestic airlines, a move seen as a potential boon for its struggling domestic aviation sector.
A newspaper today reported that Gulf carrier Etihad Airways was close to buying a 48 per cent stake in the debt-ridden carrier.
A formal announcement of the deal could come around December 18, the birthday of Kingfisher's flamboyant chairman, Vijay Mallya, the newspaper said, without saying how it got the information.
Mr. Mallya had met the Director General of Civil Aviation last Friday and informed the regulator that the company is in talks with an airline, but did not take any names, sources informed NDTV. He also mentioned that a revival plan will soon be submitted to the regulator.
The newspaper said Etihad will initially buy a 30 per cent holding in December and a further 18 per cent by next August.
Battling stiff competition and high operating costs, Indian carriers have been in talks to sell minority stakes to foreign investors. Etihad was reported to be eyeing buying a stake in Jet Airways, India's largest airline by total passengers carried.
Kingfisher, which Mr Mallya launched with much fanfare in 2005, was once India's second-largest airline by domestic market share. For most of this year, the carrier has struggled to pay its staff and has not flown since early October due to protests and safety concerns.
According to one estimate, it is saddled with roughly $2.5 billion in debt.
Copyright: Thomson Reuters 2012