(Updates with closing share prices in second paragraph)
Nov. 25 (Bloomberg) -- Jet Airways (India) Ltd., the nation’s largest carrier, jumped the most in five months in Mumbai trading on speculation a meeting between Prime Minister Manmohan Singh and airline chiefs may lead to help for the unprofitable industry.
Jet surged 13 percent, the most since June 24, to 278.10 rupees at the 3:30 p.m. close in Mumbai. Discount carrier SpiceJet Ltd. jumped 8.1 percent, the most since Sept. 5, and Kingfisher Airlines Ltd. rose 7.5 percent to 27.10 rupees, the highest in more than two months.
Singh may discuss the airlines’ financial difficulties at the meeting tomorrow in New Delhi, Aviation Minister Vayalar Ravi today said without elaboration. The government’s decision yesterday to ease rules on foreign investment in the retail industry also spurred optimism about similar moves for airlines.
“The foreign investment in retail has given some confidence to the aviation sector,” said Jagannadham Thunuguntla, chief strategist at SMC Wealth Management Services Ltd. in New Delhi. “The prime minister’s meeting with airline bosses has also given confirmation to the conviction.”
Singh may also discuss a possible move to let overseas carriers buy into local airlines at the meeting, Mint newspaper reported earlier today, citing an official it didn’t identify who will attend the discussion.
India’s three listed carriers and state-owned Air India Ltd. have all struggled to turn surging travel demand into profits because of high fuel costs and price wars. Kingfisher Air has also sought government assistance, as it cuts flights and seeks new loans amid a cash shortage.
Kingfisher’s billionaire Chairman Vijay Mallya said earlier this month the government must help carriers by reducing jet- fuel taxes that average about 25 percent. He also called for an easing of foreign-investment rules.
Kingfisher, Jet and SpiceJet together posted combined losses of about 15 billion rupees ($286 million) in the quarter ended Sept. 30. The nation’s airlines may lose about $2.5 billion in the year ending in March, according to CAPA Centre for Aviation, an industry consultant.
The cabinet is planning to discuss a proposal to allow foreign carriers to buy stakes in local airlines, a civil aviation ministry official, who declined to be identified, citing government policy, said last week.
The ministry has recommended that foreign airlines be permitted to purchase up to 24 percent of local carriers, the official said. In the retail sector, overseas investors will now be allowed to own as much as 51 percent of ventures selling more than one brand.
--Editors: Vipin V. Nair, Neil Denslow.
To contact the reporters on this story: Karthikeyan Sundaram in New Delhi at firstname.lastname@example.org
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