Goyal to sell 10% in Jet Airways

Airline chief is in talks with global funds.

Jet Airways Chairman Naresh Goyal today said he is in talks with “well-known international funds” to sell up to 10 per cent of his own stake in the company.

“I will be diluting whatever is required to make the balance sheet strong, but I will always keep control of the company,” Goyal said on the sidelines of the company’s annual general meeting today in Mumbai. The company will either issue fresh shares to investors, or Goyal will utilise the stake- sale proceeds to subscribe to the proposed rights issue, in a bid to channel the funds back into the company.

Goyal currently holds about 80 per cent stake in the company. He said Jet Airways will proceed with its proposed rights issue once market conditions improve. Jet Airways’ rights issue is pending for a year now because of the weak market condition.

The company earlier said it will raise a total of $800 million, including $400 million through rights issue to fund aircraft buys and expand operations. “We will take delivery of eight aircraft over the next three years, including five Airbus 330 and three Boeing 777 planes, at an investment of $1 billion, which will be funded by 100 per cent debt,” Goyal said.

Fuel impact

The Jet Airways chairman, who had earlier projected the airline to break even in FY09 (April-March), today said that breakeven will depend upon fuel prices. Soaring aviation turbine fuel price is the primary reason for airlines across the world to suffer heavy losses. In FY08, airlines in India cumulatively reported a loss of around Rs 4,000 crore. Jet Airways alone reported a net loss of Rs 253 crore in FY08.

Meanwhile, Jet Airways is planning to start fuel hedging, and is also looking at importing jet fuel for domestic operations to stem its losses this year.

“We are talking to all companies and the regulatory authorities (government) for permission to import ATF,” Goyal said. Current Indian regulations allow airlines to lift fuel from overseas for international operations, but cannot use the same for domestic operations.

Jet fuel in India is about 33 per cent more expensive than overseas. Fuel makes up over 50 per cent of an airline’s total cost of operations. Today, shares of Jet Airways India ended at Rs 394.70, down 4.3 per cent from Friday.