Jet-Kingfisher eye strategic tie up

Tuesday, October 14, 2008 at 10:10 am

Sources have told TIMES NOW that the global meltdown has prompted Kingfisher and Jet airways to forge a strategic tie-up. Reeling under a financial crisis,both Kingfisher Airlines as well as Jet Airways on Monday (Oct 13) 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.

Sources said that the two airlines were looking at synergies in operation to overcome the financial pressures they were facing. Each of the airline is understood to be suffering an estimated loss of up to Rs 10 crore a day and are facing pressure from oil companies for clearing dues.

Industry sources said the synergies, for which the two sides are talking, could include code share, ground handling, sales, frequent flier programme and rationalising domestic and international routes. It is possible that a formal announcement is expected very soon.

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.

(Agencies)

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Jet-Kingfisher eye strategic tie up

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