Liquor baron Vijay Mallya, Kingfisher Airlines has bought a stake of up to 26 % in the country’s first domestic budget carrier, Air Deccan, at 155 Indian rupees per share( a total of 5.5 billion rupees)
The loss-making discount carrier Air Deccan’s chief Gopinath had been trying to raise capital to keep it in the skies. Air Deccan, will remain an independent entity and pursue its low-cost business model. Its board unanimously approved the sale of up to 35.2 mln new preferred shares.
At board level, Gopinath will be the executive chairman of Air Deccan and Vijay Mallya the vice-chairman. Air Deccan chief financial officer Ramki Sundaram will assume the additional post of interim chief executive with immediate effect.
There is to be no merger, nor will the shareholders’ equity will be diluted. The combined market share for Kingfisher and Air Deccan is expected to be about 32-34 %. Kingfisher will probably become the largest airline in terms of market share in India.
The deal is a further example of the consolidation trend in India’s expanding aviation market, coming shortly after the acquisition of Air Sahara by Jet Airways for 340 million dollars in April. This low-cost carrier segment, can accommodate only three or four players on an all-India level.
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Source: Lanka Business
