The Hindu Business Line : Deccan-Kingfisher merged entity to raise $250 m for capex

Bangalore, Jan. 23 The merged entity of Deccan Aviation and Kingfisher Airlines plans to raise funds of upwards of $250 million through equity for its capex needs.

Mr A. K. Ravi Nedungadi, the President and the Chief Financial Officer of the UB Group which owns both the airlines, told Business Line that the funds are being raised for capex as well as for business needs. He said the issue of raising funds will be taken up at the next board meeting of Deccan Aviation on January 30. On that day, KPMG is expected to present a report on the valuation of the merged entity before the board.

The UB Group which owns 50 per cent stake in Deccan Aviation wants to raise the funds as soon as possible, Mr Nedungadi said. On December 19 last year, the boards of both the airlines agreed to merge and create a single corporate entity to reduce operational costs as well as become a profitable venture.

Small Profit

Mr Nedungadi said Kingfisher Airlines has posted a small profit during December while Deccan Aviation had dramatically reduced its losses since the merger. “Even though November-December are the peak months, we are beginning to see the traction of the two airlines operating together,” he said. He added that even after the merger, there will be no change in the character of Deccan. “The idea is not to change the character of Deccan. It is not to see that the traveller is paying more money than what he was doing earlier,” he said.

Mr Nedungadi pointed out that it was important for the merged entity to see how the net worth is utilised far more intelligently. He said the both the airlines together should be able to offer customers a far better product than that was possible when the airlines were two separate entities. “We want to offer customers the right product at the right time of the day on each of the sectors.”

He said the merged entity will now be able to use the enormous network it has more efficiently while revenue implications are also far more significant than they were earlier. He said that Deccan has also come to an agreement with Airbus where two of its aircraft production slots are being sold to another entity at a good premium.

Mr Nedungadi said that Kingfisher Airlines will start its international operations from August. The airline will operate daily flights between Bangalore-San Francisco and Bangalore-New York.

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