Monday, October 13, 2008

India's great aviation deal.

Jet Airways and Kingfisher Airlines are in discussions for a possible merger, reports Economic Times.
An announcement on a prospective mega-merger is expected shortly.
Airline companies have been under severe pressure over the past few quarters given the fiercely competitive market, slowing passenger traffic, rising costs and the current liquidity crunch.
Shares of Kingfisher Airlines gained Rs 13.85, or 35.7%, to settle at Rs 53. The total volume of shares traded was 262,517 at the BSE (Monday).
Reeling under a financial crisis, Kingfisher Airlines and Jet Airways today broached a possible alliance to overcome problems largely generated by mounting fuel bills.
Kingfisher chief Vijay Mallya walked into the corporate head office of Jet Airways at SM Centre in Andheri to discuss the issues of common interest with Jet Airways chairman Naresh Goyal as both airlines are losing an estimated Rs 20 crore a day.
When contacted, a Jet spokesperson said, "Yes, Dr Mallya and Mr Goyal met today."
Asked if the two sides are working towards an alliance to handle the financial pressures, she said: "I would not like to comment on anything at this juncture."
She also declined to take any question on the possibility of a merger discussion.
The two airlines, which have chopped a number of new initiatives including flight expansion plans and reduced jobs, are facing pressure from oil companies for payment of fuel bills - an issue on which both Goyal as well as Mallya met Aviation Minister Praful Patel last week.
The meeting between the two today is possibly to work out a joint strategy, particularly on clearing the fuel bills, before approaching the government for support.
Aviation industry has been crying hoarse about the financial pressure, which has been accentuated by the global financial meltdown resulting in loss of creamy international and national traffic.
Neither Mallya nor the Kingfisher spokesperson could be contacted for comments on the developing scenario or the talks with Jet.
While Kingfisher recently cut 300 jobs, Jet, together with its low cost arm JetLite, has cut over 680 jobs.
Jet Airways has also stared undertaking a route rationalisation exercise for its international operations. It recently announced discontinuation of operations on the Mumbai-San Francisco sector from January 13 next year.
How they stack up financially (in Rs crore)
Jet Airways Kingfisher Airlines
Revenue (FY09E) 13,689.19 2155.5
Profit (FY09E) -1143.18 -903.40
EBITDA (FY09E) -368.40 -807.50
Market cap 2,667.1 1,031.7
Enterprise value 13,611.56 1,131.38
OPM 3.54% -18.33%
Debt:Equity ratio 2.48x 0.97x
Jet Airways
Operates 85 aircraft with an average fleet age of 4.45 years
380 flights to 44 destination in India
10 Boeing 777-300 ER
10 Airbus A330-200
54 Boeing 737-400/700/800/900
11 modern ATR 72-500 turboprop
Kingfisher Airlines
Fleet of 86 Airbus and ATR aircraft flying to 70 destinations
Aviation Market Share
Indian 15.4%
Air Deccan 13.5%
Kingfisher 14.3%
Spicejet 10.4%
Paramount 1.2%
GoAir 3.9%
Indigo 11.7%
Jet Airways 21.1%
Jetlite 8.2%
Aviation Fleet Strength : FY09 Estimated
Indian 66
Jetlite 25
Jet Airways 62
Kingfisher 46
Air Deccan 43
Spicejet 20
Paramount 5
Go Air 5
Indigo 2
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