Thursday, February 5, 2009

Jet Airways not to opt for FDI in present market conditions

Mumbai (PTI): Private air carrier Jet Airways on Tuesday said it would not sell its equity to foreign carriers at this stage in view of the low valuation in current market."We will not go for any equity dilution to foreign air-carriers at this stage as it will not fetch us the required funds," a senior Jet Airways official told PTI here.

Jet Airways is the largest air-carrier in the country. Naresh Goyal's Tail Winds holds 80 per cent stake in it.Jet's assertion comes in the wake of the Union Government's proposal to allow domestic airlines to sell stake to foreign carriers.

Last year, Goyal was looking at diluting his stake to raise funds. But the stock markets have been on the downslide since January 2008, leading to a slump in Jet Airways stock prices, too.

"Low valuation was the reason for not going ahead with Goyal's dilution last year, too," the Jet official said.

Even industry experts feel that it would not be a good move for the air carrier to go for equity infusion from overseas in view of the prevailing market conditions.

"It is correct on Jet Airways part not to go for equity infusion from foreign airlines and rather manage cash on their own," an aviation analyst from a brokerage firm said on anonymity.

The market cap of Jet is currently Rs 1,500 crore, which is too low valuation to dilute the stake, he said.The current FDI norms prohibit overseas airlines from picking up stake in Indian carriers.

Kingfisher Airlines Chairman Vijay Mallya had sometime ago written to the Union Government to allow FDI in domestic carriers to make them internationally competitive.With mounting losses, liquidity crunch, Mallya is scouting for foreign funds to keep his airlines afloat.

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