Vijay Mallya's UB Group, which owns Kingfisher Airlines has bought a 26% stake in Deccan Aviation, which owns India's No.1 low-cost airline Air Deccan for Rs 550 crore. The Kingfisher acquisition of Air Deccan values the low-cost airline around Rs 2,000 crore, around the same price Jet Airways paid to buy Air Sahara recently.
Captain GR Gopinath, MD& CEO of Air Deccan will become the chairman of Air Deccan, while Vijay Mallya will be vice-chairman.
The acquistion has been made through a preferential allotment of shares to UB Holdings at Rs 155 per share. The current promoters have not sold their stakes. UB Holdings will soon make an open offer for an additional 20% in Air Deccan, as stipulated by India's stock market rules.
Out of the Rs 550 crore, Rs 150 crore will be injected immediately, while the balance Rs 400 crore will come next month. With the funds infusion, Air Deccan gets a fresh lease of life to keep it flying. Despite its large network and market dominance, Air Deccan is making huge losses day after day. Though Kingfisher Airlines is also making losses, its financials are believed to be better than Deccan's/ Besides, UB group is a cash-rich corporate which is the world's second-largest spirit maker. UB recently purchased White & Mackay in one of the biggest cross-border acquisitions.
After the acquisition, Air Deccan will be run as a separate company. Of course, Vijay Mallya will ensure that there is no clashing of routes. Some rationalising of routes, interline arrangements and optmisation of resources are surely on the cards.
The Air Deccan buyout makes Vijay Mallya the undisputed leader of Indian aviation, a status he has achieved in just two years. Air Deccan-Kingfisher combine will have a marketshare of about 32-34%, thus pushing current market leader Jet Airways to the No.2 slot. While Jet Airways has been one of the earliest private airlines to take wing in India, Kingfisher is still regarded as a newbie airline.
Discuss
Add this link to...
Tell a friend
Bury
Captain GR Gopinath, MD& CEO of Air Deccan will become the chairman of Air Deccan, while Vijay Mallya will be vice-chairman.
The acquistion has been made through a preferential allotment of shares to UB Holdings at Rs 155 per share. The current promoters have not sold their stakes. UB Holdings will soon make an open offer for an additional 20% in Air Deccan, as stipulated by India's stock market rules.
Out of the Rs 550 crore, Rs 150 crore will be injected immediately, while the balance Rs 400 crore will come next month. With the funds infusion, Air Deccan gets a fresh lease of life to keep it flying. Despite its large network and market dominance, Air Deccan is making huge losses day after day. Though Kingfisher Airlines is also making losses, its financials are believed to be better than Deccan's/ Besides, UB group is a cash-rich corporate which is the world's second-largest spirit maker. UB recently purchased White & Mackay in one of the biggest cross-border acquisitions.
After the acquisition, Air Deccan will be run as a separate company. Of course, Vijay Mallya will ensure that there is no clashing of routes. Some rationalising of routes, interline arrangements and optmisation of resources are surely on the cards.
The Air Deccan buyout makes Vijay Mallya the undisputed leader of Indian aviation, a status he has achieved in just two years. Air Deccan-Kingfisher combine will have a marketshare of about 32-34%, thus pushing current market leader Jet Airways to the No.2 slot. While Jet Airways has been one of the earliest private airlines to take wing in India, Kingfisher is still regarded as a newbie airline.
Discuss
Add this link to...
Tell a friend
Bury
TalkingTarmac 2.0 is a site for the aviation industry, where users can submit important stories they have found across the Web, vote on stories other users have submitted, comment and discuss, and create their own friends' networks. All you have to do is register (it takes a few seconds only), and read, discuss, vote and participate!
Comments