Volatile market conditions are likely to thwart fund raising plans of the airline sector in FY12, say analysts tracking the industry. Country’s largest private sector airline Jet Airways has once again put on hold its plans to raise USD 400 million via qualified institutional placement (QIP) due to spiralling fuel cost which is denting their profits. Its archrival Kingfisher Airlines too, is also not in a hurry to issue global depository receipts (GDR) to raise upto USD 300 million, mainly on account of slump in its shares on the Bombay Stock Exchange amongst other reasons.
Compared to a year ago period, airlines stocks are down over 50% on the BSE. Jet stock is now being traded at Rs 472 compared to Rs 971, Kingfisher has come down to Rs 39 from Rs 97, SpiceJet has also plunged to Rs 34 from Rs 91.
Naresh Goyal, chairman, Jet Airways and Vijay Mallya, chairman Kingfisher Airlines, both have recently indicated that it’s not the right time to go for a fund raising exercise. While Goyal said that the current market condition is not suitable for going for a QIP placement, Mallya has said that he has not set a deadline for the GDR issue.