Shares in Indian carrier Jet Airways surged by a fifth to a near three-year-high in early trade Thursday after Abu-Dhabi-based airline Etihad said it had agreed to buy a 24 percent stake in it.
Jet shares rose 19.99 percent to 688.6 rupees - its highest level since August 2010 - at the Bombay Stock Exchange.
Investors cheered the deal as Jet will benefit from strategic expertise and a capital injection from Etihad, while the Gulf carrier gets access to a vast growing Indian market.
The agreement is the first overseas investment in an existing Indian carrier since New Delhi eased restrictions in September to allow foreign firms a 49 percent stake in the country's airlines.
Debt-laden Jet said in a statement Wednesday it would sell 27 million shares to Etihad at 754.74 rupees ($13.7) per share - representing a 32 percent premium to its closing price on Tuesday.
Indian markets were closed Wednesday.
Under the deal worth 20.4 billion rupees ($380 million), Etihad will take its 24 percent stake as a result of a new share issuance by Jet and the dilution of founder Naresh Goyal's roughly 80 percent stake.
"This is a good deal for Jet in the near-term to boost its financials," said Mahantesh Sabarad, an analyst with Fortune Equity Brokers.
India is one of the biggest aviation markets in the world as its large and growing middle-class scrambles for air travel, spurred by rising incomes.
But the sector, once vaunted as a symbol of India's economic vibrancy, has seen its fortunes fade in the face of aggressive fare rivalry, a slowing economy, rundown infrastructure, high airport charges and expensive fuel.