UPDATE 2-India's SpiceJet shares surge on stake sale report

Tue Jan 15, 2013 4:10pm IST

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(Adds Qatar Airways comments in paragraph 6-7)

NEW DELHI Jan 15 (Reuters) - Shares in India's SpiceJet Ltd rose by as much as 8.5 percent on Tuesday after the Times of India reported the budget carrier was close to selling a stake to a foreign carrier, which it said was most likely to be Qatar Airways.

SpiceJet said in a later statement that it was premature to comment on the possibility of selling shares to any investor, but said some interest hd been shown after a recent rule change allowing foreign carriers buy stakes in local airlines.

"(A) few investors have evinced interest in the company post government of India allowing FDI (foreign direct investment) in the civil aviation sector to foreign airlines," SpiceJet said in a statement to the Bombay Stock Exchange.

"It will be very premature to comment on the possibilities of any fresh equity issuance to such interested parties or confirm/deny names of any specific entity," the company added.

SpiceJet shares were trading up 4.5 percent at 46.05 rupees at 0832 GMT. They surged 161 percent last year on expectations that the airline would eventually sell a stake to a foreign carrier.

Qatar Airways chief executive Akbar al-Baker said on Sunday he was not talking to any Indian carrier about buying a stake.

"India is a huge and potentially very lucrative market, but I believe there are still issues to be resolved before it will really be opened up," he told reporters in Doha.

In September India allowed foreign airlines to buy a maximum 49 percent stake in local carriers, opening the prospect of its battered airlines getting fresh funding.

Jet Airways, India's second-largest carrier, is in talks with Abu Dhabi's Etihad Airways to sell a stake, it said earlier this month, in what could be the first deal in the sector following the rule change. (Reporting by Rafael Nam and Anurag Kotoky; additional reporting by Regan Doherty in Doha; Editing by Chris Gallagher and Greg Mahlich)

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