Jet Air changes flightpath, to buy brand from Goyal

Ravi Menon, director and co-head of HSBC, said that after feedback from investors, Jet Airways had decided to buy the brands from Naresh Goyal’s Jet Enterprises.

In fact, the non-ownership of Jet Airways brand is listed as a risk factor in the airline’s draft prospectus — post IPO, Jet Airways will have to shell out a significant amount to buy the brand from Jet Enterprises.

The ‘Jet Airways’ trademark is currently registered in Hong Kong, Singapore, UAE, the UK and Mauritius. Jet Enterprises is trying to register the brand in other countries.

As things stand, Jet Airways pays a fee varying between 0.10 and 0.20 per cent of gross revenue as licence fee to Jet Enterprises. It also pays a fixed annual licence fee of Rs 1 lakh for each trade mark licensed to it. Both agreements were valid for 15 years starting October 2000 and are renewable at the option of Jet Enterprises for a further period of 10 years.

Meanwhile, launching the roadshows in Mumbai, merchant bankers expressed optimism about the success of the IPO. “The market is waiting for good IPOs,” said Hemendra Kothari, chairman, DSP Merrill Lynch. The roadshows will move to overseas markets like London, Singapore and Malaysia.

The objective of raising the funds through the IPO will be to repay the existing debt apart from meeting the capital expenditure requirements. The debt stands at about Rs 800 crore while a sum of Rs 460 crore will be required for meeting capital expenses.

Responding to a query on the funds required for flying to international destinations, Jet Airways director Vic Dungca explained that the basic infrastructure for the domestic flights was already in place. “For the international foray, we will require just a handful of people. Since the overheads will be spread to the international business as well, it will eventually bring down costs,” he said.

Gunit Chadha, head of Deutsche Bank (India), whose investment banking arm is one of the lead managers for issue, said the pricing for the IPO would be firmed up by February 28 and the listing on the stock exchanges is likely to take place by March 14.

Jet Airways plans to acquire 10 Boeing 737 (new generation) from March 2006 even as it proposed an outlay of Rs 300 crore as expenditure towards purchasing slots at foreign airports, aircraft leasing and other infrastructural support.