Moving ahead with the strategic disinvestment of loss-making Air India, the government is expected to soon invite Expression of Interest (EoI) from the bidders.
Against this backdrop, sources said a consortium of three full services, including Jet Airways, are keen to put in their bid for the national carrier.
In the week ahead, domestic investors will turn their attention to retail inflation, balance of trade data, which is seen as next key drivers for the currency markets. On the global front, investors will focus on key U.S. inflation data which will set the tone for the next meeting of the Federal Reserves Federal Open Market Committee. ECB President Draghi speech will also remain in focus.
Jet Airways along with Air France-KLM and Delta Air Lines are interested in participating in Air India disinvestment, sources told PTI.
When contacted, a Jet Airways spokesperson said the airline would not like to comment on speculations.
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Jet Airways possible bid for Air India by way of a consortium also comes less than four months after the Naresh Goyal-led airline enhanced cooperation agreement with the Air France-KLM Group.
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Interestingly, Jet Airways CEO Vinay Dube had a decade-long career at Delta Air Lines before joining the Indian carrier last year. Immediately before coming to Jet Airways, he was Senior Vice President (Asia Pacific) at the American airline.
Air France-KLM and its partners Delta and Alitalia operate the largest Trans-Atlantic joint-venture with over 270 daily flights.
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Though Air India is saddled with huge debt, acquiring the airline can help boost the acquirer in terms of footprint and bilateral rights.
While a group of ministers are still in the process of finalising the contours of Air India stake sale, the civil aviation ministry has so far said that officially it has received expression of interest from at least no-frills carrier IndiGo and an unidentified foreign airline.
Other equities research analysts have also recently issued reports about the company. Bank of America reaffirmed a “sell” rating on shares of Air France KLM in a report on Monday, February 12th. JPMorgan Chase & Co. raised Air France KLM from an “underweight” rating to a “hold” rating in a research note on Monday, November 20th. Finally, Deutsche Bank raised Air France KLM from a “sell” rating to a “hold” rating in a research note on Friday, December 1st. Two research analysts have rated the stock with a sell rating, three have issued a hold rating, two have issued a buy rating and one has issued a strong buy rating to the company’s stock. The company currently has a consensus rating of “Hold” and an average target price of $18.00.
The enhanced partnership between Jet Airways and Air France-KLM Group, announced in November, would help in boosting connectivity between 106 European cities and 44 domestic destinations.
According to Zacks, “AIR FRANCE-KLM is an airline company. The Company’s core business is passenger transport, cargo transport, and aircraft maintenance services. The Group is the world leader in terms of international passenger traffic; and its cargo activity (not including integrators) and is one of the world’s major maintenance service providers. The Group structure is simple: a holding company with two airline subsidiaries. Air France-KLM has established a set of clearly defined commitments to ensure that its strategy of profitable growth goes hand in hand with environmental quality and social progress. “
Foreign investors have pulled out nearly Rs 6,000 crore from the Indian capital markets in just six trading days of this month, primarily due to better opportunities in other emerging nations.
Net withdrawal by foreign portfolio investors from equities stood at Rs 2,410 crore during March 1-9, while the same from the debt market was Rs 3,473 crore, translating into a total outflow of Rs 5,883 crore, depositories data showed.
This follows an outflow of over Rs 11,000 crore from the capital markets—equity and debt—last month.
FPI outflows from Indian markets are a result of growing demand for the US dollar, coming from the expectation of an increase in the Federal rate. FPI may also be pulling funds from India to invest in other growing economies, Harsh Jain, co-founder and COO at Groww said.
February was not conducive on both global and domestic fronts for FPIs, said Himanshu Srivastava, senior research analyst, at Morningstar Investment Adviser India.
The introduction of long-term capital gain tax in equity investments announced in the Union Budget on Feb. 1 was the first blow to sentiments. While it did not attract a knee jerk reaction from FPIs, it did raised concerns and slowed down the pace of FPI flows.
Later, a global sell-off was triggered after fears of creeping inflation and higher borrowing costs compounded volatility in financial markets across the globe. That is when FPIs started pulling out money from the Indian equity markets.
However, this was not a surprising scenario. Usually amid global sell-offs, there tends to be a risk aversion among FIIs. In such a situation, they tend to pull out money from emerging markets like India, which are considered to be riskier than developed markets and more susceptible to global risks, Srivastava said.