Jet Airways investors take first steps towrds share sale

Source:
This story is sourced from Flight International
Subscribe today »

Domestic Indian carrier Jet Airways has held talks with shareholders Gulf Air and Kuwait Airlines about divesting their stakes in the airline, following the Indian Government's decision to change rules on foreign ownership.

Gulf and Kuwait invested around $8 million in the carrier when it started five years ago, each taking a 20% share under liberalised rules which allowed foreign holdings of up to 40%in India's new-entrant airlines.

In a reversal of policy earlier this year, however, India's aviation minister I CIbrahim specifically barred foreign airlines from holding any stake in an Indian operator.

Ibrahim wrote to Jet Airways towards the end of April giving six months for the foreign partners to divest their holdings. Jet Airways executive director Saroj Datta says that the issue has been discussed at board level, including a valuing of the stakes. He adds that the airline is working on the basis that the partners will have to divest before the end of October.

Despite failures elsewhere among the domestic Indian carriers, Jet Airways has built a solid base on the main domestic routes, accounting for close to 20%of the country's passenger market. In the last 1996/7 financial year to the end of March, Jet Airways carried 2.4 million passengers, up from 1.6 million the previous year.

Sales have been rising fast, climbing to around $200 million in 1996, and are expected to reach $320 million in 1997/8. The airline has been returning profits, but Datta says that they have "not been fantastic", given India's low-fares regime, with margins in single figures.

Lufthansa's court battle to repossess the three Boeing 737-200s leased to its former Indian partner Modiluft, has been put on hold, pending a decision by the High Court in Mumbai (formerly Bombay). Alower court judgement has already been granted in Lufthansa's favour.