Indian carriers chart strategy for lean season

India’s domestic carriers, struggling with mounting losses amid a fare war unleashed by Air India Ltd, met in Mumbai on Monday to decide on a strategy to shore up revenue and widen margins in a move that’s being watched by the aviation ministry.

“They want to hike base fares,” said one of three airline officials with direct knowledge of the meeting and what was discussed. All of them declined to be identified because of the sensitivity of the matter.

The post-lunch meeting, which was called at short notice, was held at Mumbai’s Waterstones Club, close to the international airport.

Representatives from state-owned Air India and budget carrier IndiGo, run by InterGlobe General Aviation Pvt. Ltd, didn’t attend.

The Directorate General of Civil Aviation (DGCA), the industry regulator, said it would investigate any efforts at cartelization, but was not aware of any such activity.

“We are watching the price scene situation very closely. There is a fare-monitoring unit in DGCA,” said director general Bharat Bhushan, who has been leading a campaign to root out pilots who’ve got their jobs with the help of forged documents. “So far we haven’t seen fares change.”

Those who attended the meeting included Jet Airways​ (India) Ltd executive vice-president Anita Goyal, Kingfisher Airlines Ltd chief executive officer (CEO) Sanjay Aggarwal, SpiceJet Ltd CEO Neil Mills and GoAir CEO Giorgio De Roni.

SpiceJet’s Mills declined to offer any comment. Email and calls to the Jet Airways’ spokesperson remained unanswered.

Kingfisher’s Aggarwal and GoAir’s De Roni didn’t reply to emailed questions.

The meeting came at the start of the two-week period considered the leanest of the year with many Indians avoiding travel because of religious sentiments, according to one of the officials cited above.

“It’s going to put a lot of pressure on the October-December quarter,” this official said, following the losses posted by all three listed airlines in the April-June period, traditionally considered the second best by way of profitability.

Jet Airways, along with its subsidiary JetLite, made a loss of Rs.128.36 crore, Kingfisher Rs.263.54 crore and SpiceJet Rs.71.96 crore in the first quarter of this fiscal compared with profits for Jet and SpiceJet year-on-year (y-o-y).

The current quarter is expected to be worse and it won’t get much better for the full fiscal, said an analyst.

“Q2 (second quarter) is going to be a disaster,” said Kapil Kaul, South Asia CEO of Centre for Asia Pacific Aviation. “There is a negative sentiment about the airline industry. And Q2 would further increase the downward bias. All the stocks will be serious underperformers. In this year, everyone will lose.”
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Jet, Kingfisher's fund raising plans thwarted

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.
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Airlines owe Rs 1,122 crore to AAI

Airlines operating within the country owe Rs 1,122 crore to Airports Authority of India, Lok Sabha was informed today.

The dues of Airports Authority of India (AAI) against Air India as on January 31, 2011 are Rs 720 crore, Minister of Civil Aviation Vayalar Ravi mentioned inside a written reply.

For Kingfisher, the figure is Rs 257.62 crore, Go Airlines - Rs 6.77 crore, Interglobe Aviation Ltd. (Indigo)- Rs 13.29 crore, Jet Airways - Rs 38.49 crore, Jet Lite (India) Ltd Rs 13.96 crore, Spicejet Ltd - Rs 16.99 crore and Paramount Airways - Rs 4.88 crore.

For others modest or non-operating airlines the dues stand at 50.13 crore.

He mentioned the matter of pending dues is taken up by the AAI with respective airlines from time to time .

The Minister mentioned steps have been taken to increase the facilities at the airports which include modernisation of Chennai and Kolkata Airports, development of 35 non-metro airports of the terminal buildings having state-of-the-art passenger facilities, user friendly amenities, very good ambiance and satellite based navigation system.

Airlines stocks lose altitude as crude oil spikes

Spicejet Airlines, Kingfisher Airlines and Jet Airways are down on worries that surging crude oil prices will hit their operating as well as financial performance.

Shares of Spicejet is currently trading at Rs37, down Rs2 or 5%.The stock has hit a high of Rs. 38 and a low of Rs. 37.

Kingfisher shares is currently trading at Rs. 38, down Rs1.40 or 3%. The stock has hit a high of Rs. 39 and a low of Rs. 37.

Shares of Jet Airways is currently trading at Rs. 424, down Rs17.75 or 4%. The stock has hit a high of Rs. 432 and a low of Rs. 421.
Source: indiainfoline

Kingfisher regains No.2 spot...IndiGo ahead of AI

Indigo Airlines has gone ahead of Air India by carrying 1.71 lakh more domestic passengers than the national carrier in January this year.

Vijay Mallya-controlled Kingfisher Airlines has regained the no 2 position as compared to its competitors IndiGo Airlines and Air India. Jet Airways along with its budget arm Jetlite continues to be at the top

Indigo Airlines has gone ahead of Air India by carrying 1.71 lakh more domestic passengers than the national carrier in January this year.

The total domestic passengers carried by the Scheduled Airlines of India in January, 2011 were 49.36 lakhs. It may be recalled that the total domestic passengers carried by the Scheduled Airlines of India in December, 2010 were 52.13 lakhs.

The break-up for the month of January, 2011 is as follows:

Air India (Domestic) – 7.79 lakhs, Jet Airways –8.54 lakhs, Jet Lite – 3.72 lakhs, Kingfisher – 9.61 lakhs, Spice Jet – 7.05 lakhs, Go Air – 3.15 lakhs, IndiGo – 9.50 lakhs.

The percentage share of the carriers in the month of January, 2011 is as follows:

Air India (Domestic) – 15.8%, Jet Airways – 17.3%, Jet Lite – 7.5%, Kingfisher – 19.5%, Spice Jet–14.3%, Go Air – 6.4 % and IndiGo – 19.2%.

The seat factor of the domestic airlines in the month of January, 2011 was:

Air India (Domestic) – 69.3%, Jet Airways – 73.9%, JetLite – 74.6%, Kingfisher Airlines – 86.5%, Spice Jet – 82.6%, Go Air –83.3% and IndiGo – 88.6%.

Air India gives in, sacks COO of low-cost arm

Despite protesting to the end, the Air India management today finally gave in to pressure to dismiss Pawan Arora, chief operating officer of Air India Express, the low-cost international arm with the federal government carrier.

An AI spokesperson confirmed Arora had been asked to go and said S Chandrasekhar, director (finance), would assist Arvind Jadhav, who is chairman and managing director of both AI and AI Express, till the time a new COO was appointed.

Arora’s appointment was embroiled inside a controversy, following data surfaced that he had been earlier removed from a position of test pilot by the Directorate General of Civil Aviation (DGCA).

The civil aviation ministry had then asked the AI board to reconsider the appointment. Questions had also been raised about non-renewal of Arora’s flight instructor licence.

Arora joined the airline in October and his appointment was cancelled inside a board meeting a month after. In the meeting, the independent and federal government directors had asked the management to cancel Arora’s appointment.

The management did not and even defied a letter inside the ministry asking it to eliminate Arora. This evening, however, the ministry issued fresh and final orders, asking the management to eliminate Arora.

The airline management is calling it unfortunate and autocratic. “Neither the management nor Arora was allowed or asked to justify (his stand) in any with the meetings. If we are asked to justify now, we will do it and put the situation for the require of the professional COO for AI Express,” said a senior AI official.

The official said it was not a very good factor that another person was chosen following interviewing 170 candidates after which suddenly asked to leave. Arora did not eat calls on his cell phone.

“Such decisions will impact the standing Air India has and also the range of applicants will fall drastically following we call for applications again,” said the official.

Arora did not eat calls on his cell phone. He had served the Indian Air Force for 18 years worked with Jet Airways, Paramount Airways, Kingfisher Airlines and IndiGo. He also served at the DGCA in your year.

Airlines to Hire 5,000 as Aviation Boom Returns

MUMBAI | NEW DELHI: Indian carriers will hire at least 5,000 professionals across categories this year — pilots, cabin crew and airport ground staff — buoyed by the recent boom during the aviation sector which saw high attrition and retrenchment following the onset of the downturn in 2008.

“Airlines had pulled out at least 20% ability during the industry during the downturn. That ability was restored last year and we see airlines adding another 20% ability this year and would be hiring 4,500-5,000 individuals this year,” said Kapil Kaul, CEO of aviation consultancy company Centre for Asia Pacific Aviation, South Asia.

The Indian aviation sector will grow by 18-20% this year, said aviation industry experts. Among airlines, national carrier Air India Airlines and low-cost airlines IndiGo and SpiceJet will add more than 1,000 this year. “Our flights will go up to 350 flights per day from 221 currently. We are during the technique of hiring 200 pilots, 400-500 cabin crew and as many airport ground staff this year at IndiGo,” said Aditya Ghosh, president, IndiGo.

Demand for pilots is rising because of the dearth of professionals. Airlines are chasing expats as the aviation regulator has allowed foreign nationals being employed as pilots till December 13, 2013.

“The fact these days is that all airlines in India are asking for foreign pilots and no single agency can supply those people many numbers. Airlines in India have asked all agencies that these pilots needs to be recruited on an urgent basis,” said somebody directly involved with hiring of expats, requesting anonymity.

In all, airlines are looking for about 230 commanders on an immediate basis , based on recruitment agencies. “We are searching to hire 500-600 pilots to meet the demand,” Jet’s chairman Naresh Goyal had said recently. Jet, which seems to add 49 aircraft, need 100 commanders alone to meet its international expansion plans. Jet Airways , during the downturn, had fired 1,800 flight attendants only to re-hire them following protests and political intervention. It also slashed salaries by up to 25% at greater levels.

GoAir, which plans to add 20 aircraft by 2014, will hire 250 individuals this year with 100 every for cabin crew and ground staff and 50 pilots. The only airline that doesn't look being on an expanding spree stands out as the Vijay Mallya-promoted Kingfisher Airlines . The airline pulled ability by 22% during the downturn, losing pilots to competitive airlines.

Aviation experts, however, feel that the modern-day hiring spree usually do not translate into greater salaries because of inflation and other costs. “Salaries will only go up by 15-20% on an average,” said an expert.

The staffing agencies are conservative in their demand projections. “2010 was a recovery year, which saw world-wide-web addition of 1,500 people, but 2011 is a boom year and we’ll see world-wide-web addition of 3,000 individuals or more,” said Kamal Karanth, MD, Kelly Services India, a global staffing company. Out of these 3,000, two-thirds are going to be cabin crew as well as the sleep are going to be a mix of engineers and pilots. More than the following 5 years, the growth in hiring are going to be among 100% and 200%.”

Source: India Times

Flight from Delhi cancelled, several others delayed

LUCKNOW: Dense fog enveloping the Amausi airport continued to disrupt flight movement on Saturday. Even though one domestic flight from Delhi remained cancelled, an international flight from Dubai was diverted to Jaipur.

According to reports, a GoAir flight, G8 351 with a scheduled arrival at 6.30 am remained cancelled. A Jet Airways Konnect flight 9W 2637 with a scheduled arrival at 6.45 am arrived virtually seven hours late even as visibility problems plummeted to near zero. The flight from Delhi arrived at 1.50 pm and departed only by 2.37 pm.

Likewise, a Kingfisher flights with a scheduled arrival at 8.30 am arrived at 12.30 pm and departed at 12.54. One more Kingfisher flight IT 3169 from Mumbai to Lucknow with a scheduled arrival at 8.55 am arrived only by 11.50 am.

Meanwhile, a Fly Dubai flight was diverted to Jaipur. The flight was scheduled to arrive at Amausi airport at around 7.45 am. However, the flight was diverted to Jaipur. The flight finally landed at Amausi airport at 3.40 pm and went back to Dubai at 7.30 pm.

Airport officials stated that even though visibility situation eased from the afternoon, it was back to haunt flight movement late on Saturday evening. In fact, some of the flights which have been scheduled to arrive in late evening had already started arriving late.

International reporting time for domestic flyers?

NEW DELHI: With airlines flying record loads since the Christmas weekend and the rush peaking now, airlines have advised passengers to verify in earlier than usual at crowded airports. SpiceJet passengers flying out of Kolkata this weekend got text messages to report three hours ahead of departure time — the reporting time for international flights! Jet Airways has asked flyers to achieve airports 2 hours ahead of departure time.

"In view of enhanced security at all airports by the Bureau of Civil Aviation Security, Jet has requested all its guests to verify in early to avoid congestion at airports and also allow flights to depart on time. Guests have been advised to report 2 hours ahead of departure time," said a Jet spokesperson. Airline sources say that domestic site visitors is growing incredibly sharply and airports that have not seen expansion are merely unable to cope from the site visitors figures. "In smaller airports like Goa, the security verify line for outbound passengers beings from arrival terminal itself. Kolkata is also choked. Airport expansion plans are taking off at a incredibly slow pace," complained a senior pilot.

While airlines find it difficult to hold on time performance with passengers stuck in serpentine security queues even when it's flight departure time, flyers are suffering too because of poor infrastructure.

Source: India Times

Jet Airways leads domestic airlines growth

The Indian aviation sector continued its upward swing in November, carrying 4.88 million passengers in the domestic segment, compared to 4.62 million in October 2010, even as Jet Airways emerged the top performer having a 19.2 per cent (or 9.34 lakh passengers) marketplace share.

About 46.8 million passengers utilized domestic airlines in January-November 2010, which shows an 18.9 per cent growth compared to the similar period last year, based on details released by the Directorate General of Civil Aviation (DGCA).

Jet Airways had the greatest percentage share of the domestic marketplace of 19.2 per cent (9.34 lakh passengers) even though its sister carrier Jet Lite had a 7 per cent share (3.43 lakh), which adds as much as a total 26.2 per cent marketplace share.

Kingfisher Airlines was second having a 19.1 per cent (9.32 lakh) marketplace share, followed by Indigo with 17.3 per cent (8.43 lakh) and Air India with 17.1 per cent (8.36 lakh). Spice Jet recorded a 13.3 per cent share (6.50 lakh) even though Go Air brought up the rear with 6.9 per cent (3.37 lakh).

The seat issue was the greatest for IndiGo (91 per cent), followed by Spice Jet (87.5 per cent), Kingfisher Airlines (86.7 per cent), Go Air (85.4 per cent), JetLite (82 per cent), Jet Airways (77 per cent), and the lowest for the national carrier Air India (76.9) per cent.

The overall on-time performance of the domestic airlines for November 2010 was 76.4 per cent.

Jet Airways Announces to Launch Daily Non-Stop Flight From Milano Malpensa To New Delhi

Jet Airways, India’s premier international airline, today announced that it will commence daily non-stop flights from Milano Malpensa to New Delhi from December 5th, 2010 in code share with Alitalia, producing Milan the twenty-fourth international destination on Jet Airways’ network.

Naresh Goyal, Chairman, Jet Airways, said: “We consider Milan a strategic destination, getting the company and commercial center of Italy. India, an emerging marketplace with a booming economy is a youthful and vibrant marketplace that holds beneficial potential. Jet Airways and I consume pride in bringing a taste of Modern India to Italy. Based on our experience in Europe, with a direct flight we expect the marketplace to grow by 30%. During the very first month we already have 89% occupancy on the new flight from Milan. We are therefore incredibly optimistic about this flight. Our product and our service inside air and on ground are anything incredibly special, warm and distinctive and we’re certain that the Italian marketplace will enjoy this”.

Rocco Sabelli, Managing Director of Alitalia, said: “We are incredibly happy to jobs with Jet Airways. This agreement represents a incredibly essential development for Alitalia. Connecting Italy from the principal worldwide destinations, reinforcing our leadership position inside Italian marketplace and our offer of intercontinental flights from Milan is a further step in our strategy. Alitalia stands out as the very first SkyTeam airline for getting signed an agreement with Jet Airways”.

“I am particularly happy from the new daily direct flight to Milano Malpensa – New Delhi operated by the largest Indian airline. This link will support to strengthen the relationships in between our market, wherever only the North West recorded 50% of exports to India, and a single from the major globe powers with powerful economic growth” – mentioned Giuseppe Bonomi, Chairman, SEA Milan Airports – “Malpensa confirms its leadership inside relationship with East Asia thanks also to this new flight activated inside a short time thanks our trade policy that has brought sure results: today Malpensa connects 168 destinations, reaching 86 cities outside Europe and 110 airlines”.

Jet Airways’ new flight, the only a single to offer a daily direct link in between Italy and India will connect Milan, the fashion and type capital from the world, to historic New Delhi, the capital of India.

Effective 5th December the flights will operate towards the right after schedule:

9W 141 / AZ 7082 Milano Malpensa/New Delhi: 21.25-09.55*

9W 142 / AZ 7083 New Delhi/Milano Malpensa: 13.20-18.00 (*the next day)

The airline will likely be utilizing its contemporary Airbus 330-200 aircraft configured in a couple of classes, with 30 seats in Première (Business Class seats that can be converted to 180° lie-flat beds) and 190 seats in Economy (ergonomically created seats for much more space and comfort).

Jet Airways’ and Alitalia’s guests will likely be able to experience the new state-of-the-art Terminal 3 of New Delhi Airport and achieve over 42 destinations on Jet Airways network in India. New Delhi, thanks to its strategic geographical location in between Italy and Asia, is an ideal gateway for guests from Italy to travel beyond India to other Jet Airways destinations just like Colombo, Bangkok, Kathmandu, and Dhaka. The airline will thus provide its guests a seamless travel experience as soon as transiting at New Delhi Airport.
Jet Airways Konnect

Jet Airways on a hiring mode

Mumbai: A controversy pops up among the two leading airline industries which include Jet Airways and Kingfisher Airlines wherein the latter has blamed the former of recruiting 50 Kingfisher benched pilots as co-pilots. Jet Airways denied the recruitment and commented that Kingfisher has voluntarily enable individuals pilots off due to no immediate requirement.

The Naresh Goyal controlled India's largest personalized carrier by marketplace share also plans to hire some experienced pilots as commanders within the competitor. The very first batch in the 29 benched pilots has already joined them. The airline has also confirmed the amount of pilots sent.

Due for the assumption of facing an opposition within the management, the airline has planned to maintain a meeting on 30th of November, so as to discuss the new recruitments. "How can we permit pilots to arrive and fly with us once our personal pilots aren't given their due, aren't promoted and the salaries have not been reinstated post the revival," stated a disgruntled pilot, who did not would like to be called due to the sensitivity in the matter.

Due to this kind of reactions, a huge opposition is expected within the serving pilots to your newly recruited pilots.
With the growing demand for air travel, Jet nevertheless has hiring plans as based on the marketplace estimates, Air travel is set to grow by 20-25% within the year ending March 31, 2011.

Although Jet leads with a marketplace share of 26.2% followed by Kingfisher of 19%, Jet Airways has had no choice but to hop pilots from its rivals Air India and Kingfisher since the manpower resources have not kept pace with its growth in aviation industries. Pilots must be trained with an experience of a few flying hours before their recruitment.

For the newly recruited pilots from Kingfisher, just a week's long training is adequate to your transition to fly Jet's A330 from Kingfisher's Airbus A320. As informed by the marketplace executives, Jet's management is looking forward to hiring around 300 much more commanders more than the next three years who have more than 3000 hours of flying experience,although the airline entirely declined to give the definite figure.
Source: Silicon India

Air India sacks COO with unsafe track record

Pawan Arora has been sacked as the chief operating officer of Air India Express, the low cost international arm of Air India. The decision was taken by the full AI board, which met the following on Thursday. Sources mentioned AI COO Gustav Baldauf has protested for the civil aviation ministry against Arora's removal.

"Baldauf selected Arora and is unhappy in the decision to sack him. We have told him it's up to him to decide what he wants to do," a top ministry official said.

Another high-profile appointment — of Stefan Sukumar as chief of training — is also under the scanner, having a two-member committee getting formed to glimpse into the "process of recruitment" and submit a report for the board within a fortnight.

In an action-packed day, AI CMD Arvind Jadhav and three independent directors — Air Chief Marshal (retd) Fali H Major, FICCI secretary general Amit Mitra and Ambuja Realty chairman Harsh Neotia — met civil aviation minister Praful Patel just before proceeding for the board meeting.

Thereafter, the Board unanimously decided to sack Arora, over a grounds that a number of issues about him weren't known at the time of his appointment — as reported very first by HT.

Arora joined AI on October 11. On October 22, HT exposed the truth how the Director General of Civil Aviation had removed him from four key flight-safety posts just before he joined the national carrier.

On November 1, AI's independent directors met the PM's main secretary TKA Nair to tell him they have been "misguided" and "kept from the dark" about Arora's record.

It also emerged that Arora was the chief reference for Baldauf, inside a report by a headhunting agency hired to short-list candidates to your AI COO's post.

Within months of Baldauf taking over, Arora was produced AI Express COO. Each earlier worked together in Jet Airways Konnect.

Jet Air's India passenger traffic in Sept up 37%

Jet Airways Ltd, India's largest private carrier by sales, mentioned its domestic passenger targeted traffic in September grew 37.1 percent on the year ago, whilst its international targeted traffic rose 36.4 percent.

Jet Airways has now posted 11 consecutive months of growth in passenger traffic, it said.

The group, which includes low-cost carrier JetLite, includes a marketplace share of 26.9 percent inside the country's aviation sector, it added.

Source: Sify

T3 of IGI airport to start operating from Oct 30

NEW DELHI: As soon as domestic operations begin inside integrated terminal Three (T3) on October 30, about 70% of domestic site visitors would be moving on the new terminal. Although 3 roads will consume passengers up to the Haj terminal — NH-8, the tunnel road that will be made operational by this month-end and the road from Gurgaon — only 1 road from that thing will bring about the main terminal, posing a site visitors nightmare.

A team inside civil aviation ministry led by joint secretary Alok Sinha inspected operations at the airport on Tuesday. In accordance with sources, officials pointed out that site visitors chaos would probably result right after domestic operations on the 3 main carriers — Air India, Jet Airways and Kingfisher — shift to T3. ''The tunnel road will open with only two lanes at supply and that ought to not be a problem. However, just right after the Haj terminal, after all site visitors would be pushed onto 1 road, site visitors jams will probably be a huge issue,'' stated sources.

Sources also stated that whilst everything was on schedule at the domestic side on the terminal, the entire airport experience will probably be marred if difficulties like site visitors aren't sorted out. The first four gates at T3 will probably be dedicated to domestic carriers and officials are worried that the starting on the ramp would often be crowded and keep up other traffic. A meeting is probably to be convened among Delhi International Airport (P) Ltd (DIAL) and site visitors police on October 25 to formalise a site visitors plan.

''The other issue highlighted by ministry officials was that of passenger transfer, among international and domestic and within domestic. DIAL is planning to convert IGI into a hub on the lines of Singapore and Dubai. That is a first for India and there can't be goof-ups. The issue will must be sorted out by airlines and the ministry will also keep a meeting with them right after the site visitors issue is sorted out,'' stated officials.
Source: The Times of India

Jet Airways criticised for 'encouraging' animal abuse

New Delhi: Jet Airways has been flooded with e-mails and calls following the September trouble of their inflight magazine, JetWings, printed an article on bull fighting. An animal rights organisation has written towards the airline, prompting the latter to apologise.

For NRIs, India has now arrived

The Federation of Indian Animal Protection Organisations mentioned in a statement Tuesday: 'We have been incredibly disturbed to see Jet Airways glorifying photographs of matadors tormenting bulls with banderillas sticking to their bleeding backs in their magazine.'

Responding towards the organisation's calls and e-mails, Manech Davar, executive publisher said: 'We do understand the elements raised by you and would not wish to find as an organisation and publication that encourages unjust endeavours. We assure you that there wouldn't be any more features on the same in JetWings.'

Luxury first-class flying

The organisation mentioned that in Spain, the Canary islands outlawed the sport of bull fighting way back in 1991, followed by Barcelona and Catalonia, which have been centres of this tradition.

'There is growing condemnation of bullfighting throughout Spain, across the EU and on the world,' the statement said.
Source: Sify

IndiGo’s big IPO may lead to re-rating of airline stocks

Mumbai: India’s leading low-fare carrier IndiGo, run by InterGlobe Aviation Pvt. Ltd, is planning to raise $500 million (Rs2,215 crore) through its initial public offering (IPO), the highest ever for an Indian airline, and this may lead to a re-rating of airline stocks, said sector analysts.

Shares of Jet Airways (India) Ltd, Kingfisher Airlines Ltd and SpiceJet Ltd are traded on Indian exchanges.

The IPO is scheduled for the last quarter of the current fiscal ending March 2011, said two persons close to the development. One of them is an airline executive and the other is an investment banker.

IndiGo has hired five investment bankers, including JM Financial Ltd, Credit Suisse Group AG, Citigroup Inc., UBS AG and Morgan Stanley for the proposed IPO.

Ahead of the IPO, IndiGo is looking at an equity placement that could result in dilution of promoters’ stake of as much as 25%. Last week, the company conducted investor roadshows in Hong Kong and Singapore for the equity placement.

“The exact details of the proposed IPO are yet to be finalized but IndiGo is planning to raise 10 times its earnings,” said one of the persons mentioned earlier. He added that the low-fare airline, which held a 16.4% market share in August through 188 flights across 22 destinations, will raise more than the Rs1,899 crore that rival and full-service airline operator Jet Airways raised five years ago.

Aditya Ghosh, president of IndiGo, did not return calls made to his mobile phone nor did he reply to text messages.

“The IPO is expected to leverage the success story of IndiGo,” said Kapil Kaul, India chief of Sydney-based aviation consultancy Centre for Asia Pacific Aviation, adding that the airline’s valuation would set the benchmark for industry stocks.

“This could be significantly higher than low-fare airline stock and even higher than full-service carriers such as Jet Airways,” he added.

A successful and large IPO by IndiGo could put pressure on other stocks of airline companies such as Jet Airways and Kingfisher Airlines that are also competing to raise funds from the market.

On Monday, airline stocks took a beating, with all three listed airlines losing value even as the Bombay Stock Exchange’s benchmark index, the Sensex, rose 0.15% to close at 20,475.73 points.

SpiceJet slipped 3.25% to close at `74.40, Jet Airways—India’s largest carrier by traffic—fell 1.26% to `806.15, and Kingfisher fell 1.75% to `73.05.

Since January, Jet Airways has risen 45.74%, SpiceJet 31.1% and Kingfisher 15.59%.

Read more: http://www.livemint.com/2010/10/04234454/IndiGo8217s-big-IPO-may-lea.html

Airline debt recast hinges on RBI cues

The debt restructuring of domestic carriers Kingfisher Airlines and Paramount could be delayed, as banks have decided to approach Reserve Bank of India for fresh sweeteners. Bankers said that in response to an earlier request, RBI had allowed a second debt restructuring for aviation companies. But the package does not address the issue of provisioning — a key element to the plan.

Whenever the interest rate on a loan is reset or the tenure is extended to soften terms for a borrower, banks have to treat the arrangement as restructuring. This requires higher provisioning. Banks now want RBI to allow them to treat the restructured aviation loans as a standard asset, which requires lower provisioning.

They had cited the example of the real estate sector and the special dispensation given at the height of the financial crisis to argue their case. The banking regulator, however, allowed only a marginal relaxation in provisioning.

Bankers said the benefit of a second restructuring would only be available to a few lenders, as most had not yet reworked the terms of earlier loans. “This is hardly a benefit. We will wait until we get an exemption from higher provisioning,” said the head of a public sector bank. Another banker said lenders would take up the issue with RBI again.

While there is no consortium arrangement in lending to airlines, most large banks have an exposure to Air India, Kingfisher and Jet. The restructuring will be particularly crucial for Kingfisher. The promoters of Paramount, on the other hand, are looking to repay the airline’s debt from accruals from other group companies.

In the case of Kingfisher, the proposal includes allowing a two-year moratorium on short-term debt, lowering the interest rate and converting part of the domestic debt into external commercial borrowings or cumulative convertible preference shares. The airline had a combined debt of Rs 7,413 crore at the end of December 2009. It posted losses of Rs 1,647 crore at the end of March 2010.

When the proposal for industry-wide debt restructuring was last sent to RBI, central bank Deputy Governor Usha Thorat had told a gathering of bank chiefs and government officials that bank balance sheets were looking healthy enough for them to meet the burden of higher provisioning. Soon after, RBI had allowed banks to go for a second restructuring.

Source: Business Standard

SpiceJet to make good revenues in holiday season

On an average, airlines companies stock have given more than 30% returns in the past two months. Compared to Jet Airways and Kingfisher Airlines, SpiceJet is the least indebted and most profitable one in recent quarters. Due to its low-cost carrier business, the company has been able to cash in on the increasing passenger growth and slight softening of crude oil prices.

In the quarter ended June 2010, the company’s net had an extraordinary jump of more than 100% to `55 crore. In the past six months, there has been a 22% growth in passenger traffic. The buoyancy is expected to continue in the remaining quarters of FY11 given the impending holiday seasons in the third and fourth quarter.

GROWTH PLAN: The company will begin its international operations from this month. The company would retain its focus of a low-cost carrier model and concentrate on South Asia. The company would start its first international flight from Delhi to Kathmandu (base ticket price `1499) on October 7, followed by flights from Chennai to Colombo (base ticket price `999) on October 9. For this expansion, the company will add 30 Boeing 737-800 to its current fleet size by 2014.

At present, the company operates 21 aircraft and it will add 30 aircraft to its fleet size by 2014. The company would have to invest around `12600 crore for the expansion. In the current fiscal, the company would add seven aircraft. This would stretch the company’s balance sheet to a large extent considering the fact that it is the least indebted airlines company. At present, Jet Airways India has a debt of around `13,000 crore, while Kingfisher Airlines and SpiceJet have debt of `5765 crore (as of FY09) and `438 crore (as of FY09), respectively.

Various reports suggest that since Sun TV’s chief Kalanidhi Maran is perceived to be at the helm of the company after acquiring a 37.7% stake through his firm Kal Airways, funds may come from Sun TV Network. At present, Sun TV Network has a cash of around `424.2 crore on its balance sheet. Hence, a part of these funds may come in handy for SpiceJet’s expansion.

More so, the company has internal reserves of around `587 crore. This would also help the airline not overstretch its balance sheet and at the same time carry on its expansion plans. On the other hand, the company may also resort to qualified institutional placement (QIP) for raising funds to foster its growth. In the past few quarters, SpiceJet has reported a load factor (a measure of capacity utilisation) of more 80% and hence going forward with the holiday season, the possibility of increased revenues is higher for the company.

More so, with its new international operations, it would be able to cash in on the holiday season.

Source: The Economic Times

Jet Airways inks Rs 283 crore deal with IBM

Jet Airways, country’s largest airline in terms of market share, on Tuesday announced a deal worth $62 million (approximately Rs 283 crore) for 10 years with IBM to outsource its business transformation and information technology services.

Under the deal, IBM will absorb IT employees of the domestic airlines, said M Shivkumar, senior VP, finance of Jet Airways.“The outsourced model will help us maximise our revenues.” said Mr Shivkumar. Nearly 45 employees of a 58-member IT team will be shifted to IBM. Some will be accommodated in other sections while a few people may leave Jet.

Jet Airways will look forward to leverage IBM's domain knowledge of the global airline industry and its technology leadership to meet the group’s business transformation objectives, the company said in a statement.

The Naresh Goyal-led company, was until recently using its inhouse technology to meet IT requirements.

IBM will now support Jet Airways with IT Infrastructure and application support services, including employee transition, data centre operations, central helpdesk support, server and storage operation.

The Economic Times