Jet, Kingfisher shares up on merger rumoursOctober 13th, 2008 - 8:05 pm ICT by IANS
Mumbai/New Delhi, Oct 13 (IANS) The shares of India’s two biggest airlines, Jet Airways and Kingfisher Airlines, were up Monday on rumours of a possible merger to trigger yet another consolidation bid in the country’s aviation space.The shares of Vijay Mallya-promoted Kingfisher were up a whopping 32.35 percent at Rs.51.35, while that of Jet, founded by London-based Naresh Goyal, moved up by 11.12 percent at Rs.291.80, as per data with the Bombay Stock Exchange.
“The two carriers are planning a non-compete alliance for their international operations and some kind of route rationalization on the domestic front,” said a source familiar with the development.
“A joint announcement is expected soon by the two carriers. They may make the announcement during the aviation conclave in Hyderabad,” he said, referring to the event from Oct 15-18.
Jet Airways had recently scrapped its Mumbai-San Francisco flight, just seven months after its launch, while Kingfisher has postponed the launch of services on several international routes even after obtaining permission to fly.
Most Indian carriers including Jet Airways and Kingfisher have also been trying to raise money the past few months, but without much success.
Reacting to the merger reports, Kapil Kaul, the chief executive officer of the India chapter of the Centre for Asia Pacific Aviation (CAPA) - a think tank on aviation industry - said the move sounded “unrealistic”.
“They must be looking for collaboration, concerning operations. This could be to built up confidence among investors and the market,” Kaul told IANS. “Since Indian carriers are facing losses, the two could be working out a deal to cut costs.”
Kingfisher had acquired low-cost Air Deccan last December, while Jet had taken over Air Sahara in April 2007. The two carriers that were acquired have since been renamed Kingfisher Red and JetLite, respectively.
As per official data available with the aviation ministry, the market share of the four entities amounted to 58.5 percent in July, compared with 18.3 percent for state-run Air India, into which the erstwhile Indian Airlines was merged.
The other scheduled players, with percentage share in brackets, are SpiceJet (8.4 percent), Paramount (1.6 percent), GoAir (2.5 percent), IndiGo (10.5 percent) and MDLR (0.22 percent).
The consolidation in the Indian aviation space was triggered with the cabinet’s nod in March last year for a merger between Air India and Indian Airlines under a new company - National Aviation Company of India Ltd.
Following that, Jet Airways announced April 12, 2007, that it had inked a deal to take over Air Sahara for $338 million. And Dec 19 last year, Kingfisher also said it was acquiring controlling stake in Air Deccan.
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