The Hindu Business Line : Air Deccan set to get last tranche of $40-m funding

Bangalore, Oct 8 Deccan Aviation which runs Air Deccan could see some improvement in its bottomline during the next quarter as it is all set to get about $40 million which is the last of the four tranches from a deal with two European banks.

In another development, sources in Air Deccan said that cartoonist R.K. Laxman’s creation, “Mr Citizen”, the brand ambassador of the airline, will no longer be displayed on any of its aircraft.

There is also a possibility of the airline withdrawing “Mr Citizen” from some of its promotions as well. Deccan Aviation officials were not available for comments.

But sources, however, said the airline still holds the right to use Mr Laxman’s creation wherever it feels is appropriate.

Deccan Aviation had signed a deal with Investec Bank and HSH Nord Bank AG, Germany, last October to raise $100 million to fund its cash flow needs.

In return of these funds, the airline had assigned the purchase of its 60 Airbus aircraft to a special purpose company (SPC), Southwest Trading Ltd, funded by the two European banks.

The funds which would go straight to the bottomline was payable to the airline in four tranches over a period of 15 months.

The release of the funds were tied to compliance of certain financial covenants and were “related to balance sheet numbers.” The airline has so far received $60 million out of the $100 million it had raised from this deal.

Once the airline gets $40 million funding, it will help it to consolidate its operations. For the last quarter of its July 2006-June 2007 financial year, the airline’s net losses increased 57 per cent to Rs 173.09 crore on revenues of Rs 514.02 crore, which recorded an increase of 17.17 per cent.

Sources said that Air Deccan has shown improvement in its on-time performance as well as reduction in cancellation of flights. “As far as on-time performance is concerned, the airline is among the top two in this category,” sources said.

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