November 15, 2018 / 12:35 PM / a month ago

UPDATE 2-Jet Airways shares soar on reports deal with Tata is close

* Jet shares settle 24.4 pct higher

* Jet calls news of Tata deal-talk "speculative" (Adds graphic)

By Chris Thomas

BENGALURU, Nov 15 (Reuters) - Shares of India's Jet Airways Ltd had their best day since listing on Thursday following media reports that the debt-laden airline was nearing a deal with Indian conglomerate Tata Sons Ltd.

Tata SIA Airlines, a joint venture between Tata Sons and Singapore Airlines that operates domestic carrier Vistara, is eyeing an all-stock merger with Jet, the Economic Times reported earlier in the day, citing sources.

As part of the deal, which would be a lifeline for the Indian carrier, Singapore Airlines would also buy out Jet founder Naresh Goyal's 51 percent stake, the report said.

Jet said the report was speculative.

"There are no discussions or decisions by the board which would require a disclosure," it said in a statement to the stock exchange.

Meanwhile, local daily the Times of India, citing people close to the situation, said that Tata Sons Chairman N. Chandrasekaran was expected to present a business viability plan to the board on Friday on a proposed acquisition of Jet.

Tata Sons did not immediately respond to a Reuters request for comment. Naresh Goyal and family were not immediately reachable for comment.

Jet shares, which had fallen 69 percent this year, rose as much as 30 percent before ending almost 25 percent higher at 320.9 rupees on record volumes. That was their best closing level since late August and their best performance in percentage terms since listing in 2005.

Any deal would transform Tata, India's largest conglomerate, from airline fringe player into the country's dominant, full-service international carrier.

India is the world's fastest-growing domestic aviation market with annual passenger growth of about 20 percent, but rising fuel costs, a weak rupee and intense competition have wrought havoc on the finances of carriers such as Jet.

The company posted its third consecutive quarterly loss on Monday and said it was undertaking a review of its business to cut costs and boost revenues in order to stay afloat. The airline is seeking funds by raising equity and selling a stake in its loyalty programme.

"We are actively pursuing both the transactions and are currently at various stages of discussions with multiple interested parties," Chief Financial Officer Amit Agarwal told analysts on a call on Tuesday.

Jet's market capitalisation was 36.45 billion rupees ($506.46 million) at the close of trading on Thursday, while its net debt on Sept 30 was 80.52 billion rupees ($1.12 billion), of which 60 percent is dollar-denominated.

The carrier's survival is crucial for the host of companies from which it leases more than 100 of its aeroplanes. The airline also has 225 Boeing Co 737 MAX jets on order.

Sources told Reuters earlier this week that Tata was in active talks to acquire a controlling stake in Jet but had not reached the stage of conducting due diligence.

($1 = 71.9700 Indian rupees)

Reporting by Chris Thomas and Aditi Shah; Editing by Himani Sarkarand Kirsten Donovan

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