Hot stock: SIA edges lower; airline confirms talks over stake in Jeju Air

SHARES of Singapore Airlines (SIA) were down three Singapore cents at S$12 on Tuesday - though trimming losses in early-morning trading - after Singapore's national carrier confirmed it has been in discussions over a stake in South Korea's Jeju Air.

"Singapore Airlines wishes to confirm that discussions have taken place on a possible equity investment in the airline," it said in a statement before the market opened.

A Jeju Air spokesman told Reuters on Tuesday that SIA plans to take a direct stake, or through the budget airline's initial public offering (IPO). Jeju Air is set for an IPO in the fourth quarter of this year, which would make it the first listed Korean low-cost carrier, Reuters said.

Based on its market capitalisation on the over-the-counter market, the company is now worth about 700 billion won (S$861 million).

The two partners have been in talks since late last year, the spokesman told the wire agency.