NaAtMaD – News and Articles that Make a Difference

News, Articles, Announcements, Reports related to Indian Economics and Corporate World

Jet, Kingfisher in talks for strategic tie-up

Posted by Yogesh on Monday, 13 October, 2008

MUMBAI: Reeling under a financial crisis, both Kingfisher Airlines as well as Jet Airways on Monday broached a possible alliance to overcome their problems largely generated by mounting fuel bills.

Kingfisher chief Vijay Mallya walked into the corporate head office of Jet at S M Centre in Andheri to discuss the issues of common interest with Naresh Goyal, as both the airlines are losing an estimated up to Rs 20 crore a day.

When contacted, a Jet spokesperson said: “Yes, Dr Mallya and Mr Goyal have met today.”

Asked if the two sides are working towards an alliance to handle the financial pressures, she said: “I would not like to comment on anything at this juncture.” She also declined to take any question on the possibility of a merger discussion between the two corporate leaders.

The two airlines, which have chopped off a number of new initiatives including flight expansion plans and laid off jobs, are facing pressure from oil companies for payment of fuel bills, an issue on which both Goyal as well as Mallya met Aviation Minister Praful Patel last week.

The meeting between the two today is possibly to work out a joint strategy, particularly on clearing the fuel bills, before approaching the government for support.

Aviation industry, as such, has been crying hoarse about the financial pressure, which has been accentuated by the global financial meltdown resulting in loss of creamy international and national traffic.

Each of the two airlines is believed to be suffering a loss of USD 2 million (nearly Rs 10 crore) a day, which has in fact prompted Kingfisher to downsize its fleet.

Neither Mallya nor Kingfisher spokesperson could be contacted for comments on the developing scenario or the talks with Jet.

Kingfisher had recently laid off 300 jobs, while Jet, together with its low cost airline JetLite, has also cut 687 jobs.

Jet Airways has also stared undertaking a route rationalisation exercise for its international operations. It recently announced discontinuation of its Mumbai-San Francisco flight from January 13 next year.

Earlier, the shares Jet Airways and Kingfisher Airlines, were up Monday on rumours of a possible merger to trigger yet another consolidation bid in the country’s aviation space.

The shares of Vijay Mallya-promoted Kingfisher were up a whopping 32.35 percent at Rs.51.35, while that of Jet, founded by London-based Naresh Goyal, moved up by 11.12 percent at Rs.291.80, as per data with the Bombay Stock Exchange. Source The Economic Times

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: