Jet Airways mulling merger with subsidiary JetLite
25 Aug 2008
Mumbai: Jet Airways, the country's largest private airline, is mulling a merger of its wholly-owned subsidiary JetLite with itself sometime in the current fiscal. According to company sources, if made, the move will allow the carrier to break even by the end of the current calendar year.
Jet Airways acquired rival Air Sahara in 2007 and rechristened it as JetLite, positioning it in between a full-service and a low-cost carrier.
According to company sources, the airline is mulling such an option primarily to dispel fears in the money market regarding its viability as a business. The carrier's efforts at raising money from the equity markets has remained stillborn. It now feels that its attempts to raise funds from the money markets will bear no fruit either, even though it commands more than 25 per cent share of the Indian market, if banks and other financial institutions fail to see it as a profitable entity.
The fact that it has posted losses in excess of Rs700 crore in the first quarter of the current financial year, may ensure that break-even may not be possible before FY09, according to industry analysts. It becomes even more difficult to raise funds, given the current environment in which the airline industry is operating.
According to industry analysts, merging JetLite into Jet Airways may turn out to be a wise decision. It is even more difficult for low-cost carriers to remain in business offering low fares.
JetLite, with around 12 per cent market share, has already cancelled 15 flights and may bring down the total number of its services to around 125, from 150.
