FIIs increase shareholding in Kingfisher Airlines, cut in Jet Airways and SpiceJet

CHENNAI: In a speculative bet, foreign institutional investors have increased their shareholding in debt-ridden Kingfisher Airlines while cutting their exposure in seemingly better-placed rivals Jet Airways and SpiceJet. 

The latest shareholding data filed with the stock exchanges show that foreign investors have increased their stake in the Vijay Mallya-owned airline to 2.46% in the September quarter from 0.98% in June. During this period the airline's troubles worsened with unpaid employees refusing to work and the civil aviation regulator suspending its licence. Kingfisher has since reached a deal with its staff and is waiting for the suspension of its licence to be revoked. 

Foreign funds, however, cut stakes in Jet Air and SpiceJet, which have gained market at the cost of Kingfisher and got back into the black in the first quarter of 2012-13. 

Foreign investors cut their stake in the Naresh Goyal-owned Jet Airways to 4.81% from 7.12% as well as in the Kalanithi Maran-owned SpiceJet, where their stake is now 2.86% from 3.59% in the previous quarter. 

In SpiceJet, US-based fund College Retirement Equities Fund held a 1.1% in the June quarter. Its name doesn't find a mention anymore. This indicates that it has either exited or brought its stake below 1% (in which case a shareholder isn't identified). The names of other foreign institutional investors in SpiceJet, Kingfisher and Jet Airways aren't known either, implying each of them hold less than 1% stake. 

"This is a speculative bet on Kingfisher about its prospects with the lenders and foreign direct investment in aviation. Kingfisher and Pantaloon Retail have been the speculative bets for FIIs in September," said Saurabh Mukherjea, head of equities at Ambit Capital. 

The biggest positive for the airline industry in the September quarter was the government approval for 49% foreign direct investment in aviation. 

Foreign investors drive the mood of the Indian stock market. According to a Morgan Stanley research report, FII holdings have touched a five-year high in the broader market comprising 1,200 stocks and valued at $240 billion, only marginally lower than the country's foreign exchange reserves. 

Kingfisher shares lost 5% in the September quarter. However, the stock gained as much as 49% in the week following the FDI announcement on September 14. Subsequently, it pared all its gains. Shares of SpiceJet have remained flat, while those of Jet Airways have lost 8.8% from the June quarter. 

Bank of America Merrill Lynch expects airlines to post loss in the second quarter on account of seasonal weakness and low utilisation. However, it said the third quarter would be profitable. 

In a recent note to clients, it also said it does not except Kingfisher to normalise its operations in the near term. And, it said, despite Kingfisher's temporary shutdown none of the carriers are rushing to add capacity. The brokerage has a "buy" rating on Jet Airways with a price target of Rs 480 and SpiceJet with a price target of Rs 42.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/fiis-increase-shareholding-in-kingfisher-airlines-cut-in-jet-airways-and-spicejet/articleshow/17027765.cms

Air India to fill board vacancies soon

NEW DELHI: After a gap of over one and a half years, national carrier Air India will fill its board with three professionals in a couple of months who will serve as independent directors, said officials in the civil aviation ministry familiar with the development. 

The choice of top experts on the board is a clear departure from the earlier practice of getting reputed industrialists to help the state-owned airline with its key decisions. The AI board has nine directors at present, but three posts of independent directors have remained vacant since March 2011. 

"We have requested ex-Proctor & Gamble CEO and writer Gurcharan Das, international management guru and sought-after business advisor Professor Ram Charan and co-founder director of IIT Roorkee Professor Prem Vrat to join the AI board as independent directors," a senior official from the civil aviation ministry said. 

Earlier, Anand G Mahindra , vice-chairman and managing director of the Mahindra Group, Amit Mitra, ex-secretary general of industry body Ficci and Yousuffali MA, managing director of Abu Dhabi-based EMKE Group, were the independent directors with corporate interests, who quit long back. 

Chairman of Ambuja Realty Development Harsh Neotia and former chief of the Indian Air Force, Air Chief Marshal Fali Homi Major are the other two independent directors who continue to hold the post. 

While Mahindra stepped down from the Air India board in April 2011 citing conflict of interest as he too launched a business in the aviation space, Mitra put in his papers the same month as he was contesting the assembly elections in West Bengal. 

Yousuffali resigned this July saying he wasn't interested in this position any more and wanted to launch an airline from Kerala. 

"This time, the minister does not want politics in the AI board and wants to focus on the turnaround of the airline with the expertise of independent directors," the ministry official said. 

The government has also opted for experts because it thinks that commercial people don't have enough time, while Air India needs people who have experience in advising companies and turning businesses around, he added. 

Both Mitra and Mahindra were appointed to the Air India board as independent directors in 2010, along with Neotia and former Air Chief Marshal Fali Homi Major, to shore up the financial performance of the carrier. 

In October 2010, the four directors in a representation to the Prime Minister's Office objected to the manner in which the airline's revival plan was being executed.The immediate trigger was the procedure followed in appointing a Chief Training Officer for Air India as well as a CEO for AI's low-fare carrier Air India Express. The CTO Stephan Sukumar resigned later, while the AI Express CEO Pawan Arora was sacked by the Air India board.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/air-india-to-fill-board-vacancies-soon/articleshow/17027360.cms

Air India likely to induct Gurcharan Das as independent director

NEW DELHI, OCT. 30: 

Former Chief Executive Officer of Procter & Gamble India Gurcharan Das is among the three persons likely to be appointed as independent directors of the Air India board.

Official sources said the Government was also considering appointing management guru Ram Charan and renowned academician Prem Vrat as independent directors in the State-run airline.

Sources indicated that it could take up to two months before the three names get the Government nod.

The positions of three independent directors have been vacant since April 2011 after the current West Bengal Finance Minister Amit Mitra, Mahindra and Mahindra Chief Anand Mahindra quit. Yousuffali M.A., was the third independent director, who resigned in 2011.

Currently, former Chief of the Indian Air Force Fali Major and Chairman of Ambuja Realty Development, Harsh Neotia, are the only two independent directors on the board.

http://www.thehindubusinessline.com/industry-and-economy/logistics/air-india-likely-to-induct-gurcharan-das-as-independent-director/article4047893.ece?homepage=true&ref=wl_home

Indian airlines running a price fixing cartel: Captain Gopinath

Says though India is a market of low-cost carriers, it is not of low-cost fares airlines

Captain GR Gopinath, pioneer of low-cost aviation, has accused domestic airlines of running a cartel in fixing fares.
 
At a panel discussion at the Centre for Asia Pacific Aviation’s summit in Mumbai on Tuesday Gopinath also pointed out that airlines should price the fares in such a manner  to maximise loads. However, he also emphasised that ticket selling should be above cost.

Gopinath said, “The entry level fares of all LCCs and Full Service Carriers does have only around Rs 500 gap. There is a cartel to fix the price of the bottom. Break the cartel and then only the market will expand.”

He said that though India is a market of low-cost carriers (LCCs) but not of low-cost fares airlines.

Neil Mills, the Chief Executive Officer of Spicejet, said, “There is no cartel. If there was a cartel why would we all be losing money? If we manage to fix prices at levels where most carriers lose money, it does not seem good move.”

Gopinath added, “Despite the cost structure, the cost per available seat kilometer, an industry benchmark for Indian LCCs, is comparable to Ryan air. You cannot get below that. I do not think there is a future for any of us if we do not expand the consumer base.”

So we need to figure out what do we need to do otherwise, we will be cannibalizing each other’s passengers, he added.

http://business-standard.com/india/news/indian-airlines-runningprice-fixing-cartel-captain-gopinath/193697/on

Air India’s neglect: SJD calls for mass protest

Thiruvananthapuram:  Socialist Janata (Democratic) President M P Veerendrakumar today said mass protest was the only option left to find a solution to Air India's continuing "neglect" of passengers in the Kerala-Gulf sector. 

In a statement here, he alleged the airline was repeatedly harrassing passengers by cancellation of flights without notice and frequent delays in operation of services. 

Most of the passengers in the Kerala-Gulf sector relied on Air India Express as it was a budget airline. But the authorities were showing "scant regard" for their needs, he said. 

At least six flights from Kozhikode were cancelled last month. Many passengers faced the prospect of losing jobs as they could not reach their destinations in time. Unlike other airlines, Air India was not even trying to make alternative arrangements when flights were being cancelled, he said. 

He charged Keralite passengers were being singled out by AI while its operations were smooth in north India. With memoranda to the authorities producing no result, people would have to resort to agitations against the airline, the statement said.  

http://english.manoramaonline.com/cgi-bin/MMOnline.dll/portal/ep/contentView.do?contentId=12724678&tabId=1&programId=11565535

Mallya meets Aviation Secretary

Beleaguered Kingfisher Airlines promoter Vijay Mallya, on Tuesday, briefed Civil Aviation Secretary K.N. Srivastava on the airlines’ revival plan and its intention to resume operations as soon as possible.

“I have briefed him (Mr. Srivastava) on the revival and restart plan. It would be a comprehensive plan, and all hurdles will be crossed,” Mr. Mallya told journalists after the meeting. Mr. Srivastava is understood to have touched upon the issue of paying off the dues to various vendors, including Airports Authority of India. Kingfisher is expected to apply to the Directorate General of Civil Aviation (DGCA) for revocation of suspension or flying licence in a few weeks. The services of Kingfisher services can be restored only after the DGCA is convinced that the carrier can provide safe operations. Sources said the government is concerned about how the cash-strapped carrier would pay its dues to its service providers. The airline is likely to face more trouble shortly as the Revenue Department has decided to move the Supreme Court to expedite recovery of tax dues worth about Rs. 330 crore.

http://www.thehindu.com/todays-paper/tp-business/mallya-meets-aviation-secretary/article4049106.ece

Air India likely to induct Gurcharan Das as independent director

New Delhi, Oct. 30:  

Former Chief Executive Officer of Procter & Gamble India Gurcharan Das is among the three persons likely to be appointed as independent directors of the Air India board.

Official sources said the Government was also considering appointing management guru Ram Charan and renowned academician Prem Vrat as independent directors in the State-run airline.

Sources indicated that it could take up to two months before the three names get the Government nod.

The positions of three independent directors have been vacant since April 2011 after the current West Bengal Finance Minister Amit Mitra, Mahindra and Mahindra Chief Anand Mahindra quit. Yousuffali M.A., was the third independent director, who resigned in 2011.

Currently, former Chief of the Indian Air Force Fali Major and Chairman of Ambuja Realty Development, Harsh Neotia, are the only two independent directors on the board.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/air-india-likely-to-induct-gurcharan-das-as-independent-director/article4048657.ece

Kingfisher revival plan in progress, Mallya tells Aviation Secretary

New Delhi, Oct. 30:  

Kingfisher Airline’s promoter Vijay Mallya has told the Government that work was going on with regard to the revival plan for the debt-strapped airline.

Mallya conveyed this at a meeting that he had with Civil Aviation Secretary K.N. Shrivastava here on Tuesday. Sources indicated that at the meeting Mallya did not disclose from where funds would come for the airline’s recapitalisation or by when it would restart flights.

As in the past few meetings that senior officials of Kingfisher Airlines had with senior Government officials, verbal assurances were given about the revival plan and recapitalisation.

The airline ceased operations on October 1 after its employees refused to continue working till they were paid back salaries owed for the past seven months.

On October 20, the Directorate General of Civil Aviation suspended Kingfisher’s licence, claiming that it had failed to respond to the show-cause notice issued earlier.

In an effort to resolve the crisis, the airline paid March salaries to its employees recently and assured them that salaries for April and May would be paid before Diwali on November 13.

http://www.thehindubusinessline.com/todays-paper/tp-economy/kingfisher-revival-plan-in-progress-mallya-tells-aviation-secretary/article4048629.ece