Source: Bloomberg

Jet Airways Delays Share Sale as Indian Market Falls (Update1)

June 2 (Bloomberg) -- Jet Airways (India) Ltd., whose shares have fallen by a third since its initial public offering, has delayed an additional $300 million sale after the local stock market had its biggest monthly decline in two years.

Jet Airways now plans to sell the shares to Indian investors by October after delaying the sale from the end of August, Chief Financial Officer Carl Saldanha said in a May 31 interview in Mumbai, where the nation's biggest domestic airline is based. The airliner may next month sell $500 million of overseas bonds that could be converted into stock, Saldanha said.

Overseas investors are shunning Indian stocks on concern they are expensive after four straight years of gains for the Sensex index. India's benchmark index fell 14 percent last month and Deccan Aviation Ltd., which owns India's biggest low-fare airline, could lure investors to its IPO only after cutting the sale price and extending the bidding date.

``These are not the best of times for airlines to come out with public issues,'' said R.K. Gupta, the chief executive officer of Credit Capital Asset Management in New Delhi. ``The markets are nervous and apart from that, the airline industry has its own set of problems.''

Jet Airways, owned by billionaire Naresh Goyal, needs money to partly finance the planes it has ordered from Airbus SAS and Boeing Co. The carrier has 20 planes on order from Boeing and 10 from Airbus, with an option to buy another 20 planes to add to its fleet of 51 planes.

`Market Situation'

``In the last couple of weeks the market situation has deteriorated,'' Saldanha said. ``We're just watching it for a while before we go ahead with it.''

Shares of Jet Airways fell 0.5 percent to 734.9 rupees in Mumbai yesterday. The carrier sold 19 billion rupees ($410 million) of shares in a February 2005 IPO at 1,100 rupees each. The stock declined to as low as 700 rupees on May 25.

Only one of the six banks that managed the Jet Airways IPO has a ``buy'' rating on the stock, according to data compiled by Bloomberg. Out of the 18 analysts that cover the Mumbai-based airline's stock, only two have a ``buy'' rating.

Jet Airways isn't the only airline in India that is losing favor with investors. Deccan Aviation, which operates the Air Deccan low-fare carrier, last month raised 16 percent less money than targeted in its IPO after cutting the sale price to attract investors.

JPMorgan Chase & Co. and ABN Amro Holdings NV backed out of managing the IPO of Deccan Aviation, which also runs the nation's largest helicopter charter business, citing ``scheduling'' issues.

Overseas Sale

Jet Airways hasn't completely abandoned a plan to sell shares overseas, Saldanha said. The carrier said April 29 it was shelving the plan because it was more attractive to raise money in the Indian market.

``We can still do a GDR, but we're focusing on a local issue right now,'' Saldanha said. ``If the market is very good at that point in time, we can still consider doing a GDR.''

Jet Airways hasn't appointed a bank for the public issue, he said. The Indian units of HSBC Holdings Plc, Deutsche Bank AG, UBS AG, Citigroup Inc. and Merrill Lynch & Co., along with Kotak Mahindra Bank Ltd., managed the February 2005 IPO.

Jet Airways will turn to other sources of financing if its share price continues to fall, Saldanha said.

``We will simply go and use our alternate sources of funds until the market situation gives us a good deal,'' he said. ``We have debt sources, other sources from the bank market.''