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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Air France-KLM    AF   FR0000031122

AIR FRANCE-KLM

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Collapsed Jet Airways' ex-partners, rivals scramble to fill India capacity void

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06/02/2019 | 09:45pm EST
An empty front desk is seen inside the Jet Airways headquarters in Mumbai

SEOUL (Reuters) - Former partners and rivals of Jet Airways Ltd are launching replacement routes and looking for new codeshare partners as they scramble to fill a lucrative gap left by the collapse of the India's once-largest international airline.

Jet, which halted operations on April 17 after running out of cash, had a market share of around 12 percent on international flights to and from India in 2018, according to government statistics, outstripping even national carrier Air India.

In Jet's absence, cash-strapped Air India is the only Indian carrier that operates widebody jets capable of non-stop flights to Europe and the United States, although the Vistara joint venture owned by Tata Sons and Singapore Airlines Ltd has 6 Boeing Co 787s on order due for delivery from next year.

With international airfares spiking by up to 36 percent in May and June according to data from travel portal Yatra.com, Jet's former partners, Virgin Atlantic and Delta Air Lines Inc, have been among the first to announce new Indian routes to replace ones previously flown by Jet.

"People still want to travel. Foreign carriers are changing their networks and putting more into India if they can," Association of Asia Pacfic Airlines Director General Andrew Herdman said on the sidelines of an airline industry conference in Seoul.

KLM and sister carrier Air France will boost their capacity in India by 25 percent in the upcoming winter season through the use of bigger planes, higher frequencies and a new Bangalore-Amsterdam route from October.

In October, Virgin Atlantic will launch Mumbai-London, while Delta will fly from Mumbai to New York from December, in a sign it will take months to replace Jet's non-stop capacity.

"I think you'll see in the next four or five months most of the (domestic) capacity will be taken up," SpiceJet Ltd Chairman Ajay Singh said in an interview. "As far as international is concerned, that may take a little longer as Jet was flying a significant number of widebody aircraft which are tougher for carriers in India to add at such a rapid pace."

Other airlines, like Emirates, Qatar Airways and Turkish Airlines, will need India's newly re-elected Modi government to loosen bilateral restrictions that cap flights at current levels. Singh said that was unlikely due to India's policy of trying to develop its own hubs.

The capacity gap in the Middle East means fares in that market are expected to remain higher for longer than on some domestic and other routes, Indian low-cost carrier IndiGo's Chief Financial Officer Rohit Philip told analysts on May 27.

IndiGo has a codeshare agreement with Turkish, and days after Jet stopped flying SpiceJet signed a codeshare agreement with Emirates. Neither Indian carrier has widebodies.

Airbus SE Chief Commercial Officer Christian Scherer said new technology, such as a longer-range version of the A321neo, could help IndiGo launch non-stop flights to Europe without taking the costlier and riskier decision to add widebodies to its fleet.

"I think you are going to see some widebody capacity going into India to replace Jet's and you are going to see some narrowbodies picking up that market," he told reporters.

Other former Jet partners are in talks with carriers like IndiGo and SpiceJet about new codeshare relationships.

Qantas Airways Ltd does not fly to India itself but it had used Jet to boost its reach beyond Singapore to Indian destinations and wants a new partner for the large market, CEO Alan Joyce said.

"They were a big partner and we were carrying a lot of traffic on them," he said. "We have been approached by just about every major Indian carrier because they know there is a lot of traffic that we can provide them. We have had dialogue in the last few days with four different carriers about possible agreements."

(Reporting by Jamie Freed; additional reporting by Aditi Shah in New Delhi; Editing by Stephen Coates)

By Jamie Freed

Stocks mentioned in the article
ChangeLast1st jan.
AIR FRANCE-KLM -5.88% 8.408 Real-time Quote.-9.88%
BOEING COMPANY (THE) 1.66% 323.05 Delayed Quote.-0.83%
DELTA AIR LINES INC. -2.42% 58.81 Delayed Quote.0.56%
E.ON SE -1.01% 10.354 Delayed Quote.9.81%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, SA -5.76% 584.8 Delayed Quote.-0.64%
JET AIRWAYS (INDIA) LIMITED -4.91% 32.95 End-of-day quote.19.28%
QANTAS AIRWAYS LIMITED 0.75% 6.71 End-of-day quote.-5.63%
SINGAPORE AIRLINES LIMITED -0.34% 8.82 End-of-day quote.-3.08%
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Financials (EUR)
Sales 2019 27 349 M
EBIT 2019 1 100 M
Net income 2019 331 M
Debt 2019 6 917 M
Yield 2019 0,15%
P/E ratio 2019 14,0x
P/E ratio 2020 5,94x
EV / Sales2019 0,39x
EV / Sales2020 0,37x
Capitalization 3 823 M
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Number of Analysts 22
Average target price 10,98  €
Last Close Price 8,94  €
Spread / Highest target 47,6%
Spread / Average Target 22,8%
Spread / Lowest Target -10,6%
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Benjamin M. Smith Chief Executive Officer & Director
Anne-Marie Couderc Non-Executive Chairman
Frédéric Gagey Chief Financial Officer
Jean-Christophe Lalanne Executive Vice President-Information Technology
Maryse Aulagnon Independent Director
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