NEW DELHI, NOV 24, 2004:
Jet Airways, India’s biggest domestic airline, is considering
an initial public offer of shares to fund growth as the country’s
aviation sector recovers after a slump.
Naresh Goyal, chairman of the 11-year old airline, told reporters that
the company was seriously looking at an IPO to improve its balance sheet
and would take a decision before the end of December.
“Several international banks are advising us,” Mr Goyal said.
Jet Airways India (Pvt) Ltd has grown rapidly since its founding to
grab 43.4% of the domestic air travel market, surpassing state-owned
Indian Airlines Ltd which for decades was a monopoly provider of domestic
air service.
A top Jet Airways official told Reuters that bankers were evaluating
various fund-raising options, of which the IPO was an important one.
The issue, which would make it the only actively traded airline stock
in India, would fund a fleet expansion, cut the airline’s debt-equity
ratio and help build new facilities.
The official declined to say how much money the airline aimed to raise
but said that it had an equity of $20 million. Jet had considered a
private share placement three years ago but abandoned it after an industry
slump.
The air transport industry has repeatedly voted Jet Airways India’s
best airline for its in-flight service and young fleet of 41 aircraft,
acquired in about a decade since India threw open its skies to competition.
Jet Airways is fully-owned owned by Tail Winds Ltd, a company registered
in the Isle of Man.
Goyal, a non-resident Indian and travel agent-turned-entreprenuer,
owns 100% of Tail Winds. India’s domestic air travel market, for
years stunted by high fuel taxes and levies, expanded 26.5% in the first
half of this fiscal year, helped by falling fares and a revival of tourist
traffic. The growth is expected to force carriers to boost capacity.
Air travel in India rose 11% in 2003-04, aided by fare cuts but that
growth followed a severe downturn three years ago. Jet Air also said
that it was re-evaluating its plan to buy 10 planes from Brazil’s
Embraer at a cost of $260 million, announced in 2003, and could consider
other planes as well. The airline is also evaluating the Boeing 747,
777 and the Airbus A330 and A340 to fly on international routes, once
they are opened to private domestic airlines. International routes were
until recently a monopoly of two state airlines, international flag
carrier Air-India Ltd and Indian Airlines, but earlier this year the
government allowed private carriers to fly to seven neighbouring countries.
Reuters