The Telegraph
Tuesday , November 27 , 2012
Since 1st March, 1999
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Scrips of airline duo fly high

New Delhi, Nov. 26: Jet Airways and SpiceJet scrips rose sharply today amid speculation that they were in talks with foreign airlines to sell stakes.

According to government sources, Naresh Goyal-led Jet Airways and Kalanithi Maran-owned SpiceJet are in negotiations with Abu Dhabi’s Etihad Airways and Malaysia’s AirAsia, respectively, to sell minority stakes.

The market has been abuzz with speculation of such deals after the rules were relaxed in September to allow foreign carriers buy up to 49 per cent in local airlines battling competition and high operating costs.

Stocks of both Jet Airways and SpiceJet touched their respective one-year highs in intra-day trade today.

Jet Airways rose 10.81 per cent to close at Rs 560.40 from its previous close of Rs 505.75 on the Bombay Stock Exchange (BSE).

SpiceJet was up around 13 per cent at Rs 44.40 over its previous close of Rs 39.30.

The domestic aviation industry lost a combined $2 billion in the last fiscal year. Except for the unlisted IndiGo, all the others lost money, hurt by high state taxes on jet fuel, expensive airport charges and regulatory uncertainty.

Sources said the talks between Jet and Etihad had progressed considerably. “This is more or less final. It may take around a month and half.”

Jet Airways and SpiceJet declined to comment on “market speculation”.

AirAsia also dismissed speculation that it was bidding for SpiceJet.

“AirAsia rejects the speculation surrounding our possible expansion in India. These reports are completely incorrect,” AirAsia Group CEO Tony Fernandes said in a statement.

“AirAsia has not submitted a bid for the Indian budget carrier, and has no intention of doing so,” he added.

Analysts said Jet and Etihad already have a code-sharing agreement, and a deal could help them win market share from state-owned Air India as well as from Dubai-based Emirates Airline, which dominates routes between India and West Asia.

Etihad is keen to get access to Jet’s low-fare domestic network under JetKonnect, an industry source said in Dubai.

Sharan Lillaney, aviation analyst at broking firm Angel Broking, said foreign carriers were attracted to the long-term growth prospects. “No one will announce any plans until all the modalities are fulfilled.”

“SpiceJet is a good buy for international airlines as the airline has very little debt and is in the fastest growing sector which is low cost. So, valuation of SpiceJet is going to be very attractive,” Lillaney added.

Air India move

After failing to find any lessor for its five Boeing 777s, Air India plans an outright sale of these aircraft to raise up to $450 million (about Rs 2,500 crore), airline sources said.

The state-run airline will soon appoint a consultant to find a suitable buyer, besides taking Boeing’s help. The move is to trim over Rs 68,000-crore debt.

“These are surplus aircraft after the induction of the Dreamliners which we have decided to dispose of,” the sources told PTI.