Jagson sells 15.99% to foreign investor

That's the maximum a domestic airline can sell to a foreign entity

BY A CORRESPONDENT
April 15, 2006

Jagson Airlines, the low-cost airline set to launch off in May, has announced that it has sold a minority stake to a foreign investor through a private equity placement. The company has not indicated the amount of money raised. Jagson also said that it may go in for public issue in 2007.

UK Bose, president and CEO of Jagson did not divulge the name of the investor but said, "We have given less than 15.99 per cent stake to the foreign investor and we may go public next year." This is accordance with current rules, which prohibit foreign airlines from picking up stakes in domestic carriers, but allow foreign institutional investors to do so up to 15.99 per cent.

Jagson Airlines currently operates one Dornier aircraft and two helicopters on feeder routes. Plans are on for aircraft acquisitions. According to Bose, "Jagson Airlines plans to have a fleet of six Airbus aircraft by the year-end. We are also getting two MI-172 helicopters that can seat 26 passengers one of which will be given to a state government in the north-east."

Two of the six Airbus A321s are expected by May itself when the airline will begin operations. Bose added, "All the aircraft would be on a two-class configuration of economy and executive economy classes, having a price differential of about 15 per cent. The aim is to attract the economy-class business traveller and maintain a healthy financial status for the airline." The inaugural flight will cover the Delhi-Bangalore sector. In all, the airline plans to launch services in nine cities in May. The carrier is also looking to acquire an additional seven aircraft in 2007, and eight in 2008.

Jagson and Bird Information Systems have also announced a strategic partnership, whereby the latter will provide a web-based service in the areas of inventory control, ticketing, reservation, Internet booking engine, distribution and departure control.