MUMBAI: Private equity WL Ross and Co, which recently put $80 million in Indian discount airline SpiceJet, is in talks with Jet Airways and Kingfisher Airlines for a possible merger of the carrier, a newspaper reported on Friday.  "The idea is to increase the valuation of SpiceJet or the money invested by WL Ross before the firm exits," the paper cited a person familiar with the development as saying.

WL Ross has also suggested "strict cost controls and tighter management" to turn around SpiceJet, the paper cited this person as saying.

A senior executive at the UB Group, which controls Kingfisher Airlines, "confirmed the Ross approach", saying the talks are at "a very preliminary stage", the paper said.

A spokesman for Jet Airways said he did not know of such talks, while SpiceJet Director Kishore Gupta told Reuters: "I am not aware of any such development."

WL Ross had committed to investing $80 million in SpiceJet in July. Goldman Sachs last month put in $20 million. The Tata Group owns a strategic stake of about 6 percent and Dubai’s Istithmar owns 13.4 percent in SpiceJet.

At the time that WL Ross made its investment, Kingfisher Chairman Vijay Mallya said he had made an offer for SpiceJet, but had been rebuffed.

SpiceJet, which does not expect to breakeven before 2009/10, had said at the time it was open to other offers in the future.

Indian airlines, fighting high fuel costs and overcapacity, are expected to double their combined losses in 2008/09 to nearly $2 billion.

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