Airline fund-raising plans get grounded

Mumbai: Indian carriers have been hit hard by the spewing of volcanic ash, which has led to flight cancellations, and the fallout of the European debt crisis, hindering efforts to collectively raise at least $1 billion (Rs4,560 crore) as investors hold back amid signs of weakness in the recovery story.
“Collectively, as an industry, there isn’t an appetite for aviation paper of this magnitude,” said Mahantesh Sabarad, senior vice-president (equity research) at domestic brokerage Fortune Equity Brokers (India) Ltd. “Moreover, equity market confidence is being tested once again with sovereign fiscal problems surfacing.”
Jet Airways (India) Ltd, which flies the most passengers in the country, has been looking to raise $400 million for the last two-three years, while India’s second largest carrier Kingfisher Airlines Ltd is looking to raise $250-350 million through a rights offer and a GDR issue. The company expects to raise these funds by the second quarter, its spokesperson said.
In February, low-fare carrier SpiceJet Ltd started roadshows for raising $75 million by selling new shares and shortlisted half a dozen funds, but has not been able to finalize anything because of differences in valuations.
Other carriers such as IndiGo, operated by InterGlobe Aviation Pvt. Ltd, and Wadia Group’s GoAirlines (India) Pvt. Ltd, which runs low-fare carrier GoAir, have also been looking for fresh funding.
National Aviation Co. of India Ltd, which runs Air India, and has a debt of Rs21,000 crore, has successfully raised a little over $3 billion, largely because it has been backed by sovereign guarantees.
19/05/10 P.R. Sanjai/Live Mint

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Categories: Indian Aviation- In General May 2010