Indian carriers in funding drive

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Several of India's new airlines are stepping up cash-raising initiatives to generate funds to pay for the hundreds of aircraft they have on order.

The latest to confirm plans to raise cash are passenger carrier GoAir and cargo operator First Flight Couriers. Both say they intend to sell minority stakes to strategic investors to fund their respective expansions.

GoAir, which launched services in 2005 as one of several new low-fare passenger airlines, has A320s on firm order with Airbus, and the family behind it, the Wadia family, says it is in talks to sell up to 26% to strategic investors.

First Flight, meanwhile, says it plans to sell between 10% and 20% of the airline to expand its logistics business. The company has BAe ATP turboprop freighters flying domestically and has said it hopes to add larger aircraft, such as Boeing 737s.

India's domestic passenger and cargo sectors have been growing rapidly over the past few years with many new privately owned operators. To pay for aircraft already added and the more than 400 on order with Airbus, Boeing and ATR, several carriers have turned to share markets while others have sold stakes directly to strategic partners.

Low-fare airlines Air Deccan and SpiceJet are now listed on the Bombay Stock Exchange, as is full-service carrier Jet Airways. Air Deccan and SpiceJet have both been issuing new shares over the past six months, raising tens of millions of dollars in part to help pay for aircraft.

Kingfisher Airlines is also reportedly planning an initial public offering or private placement over the next two years to help raise funds for its expansion. Sale and lease-back deals on aircraft are also common now in India.

The cash-raising initiatives come as most of the country's airlines are operating in the red, as the fight for market share has led to overcapacity. Kingfisher chairman Vijay Mallya, who last year was hoping to break even from 2007, now does not expect the carrier to break even until 2009.