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The UB Group is set to finalise a deal with two strategic investors to raise about $550 million for the operations of the full service carrier Kingfisher Airlines.

Sources in the company told Business Line that the deal is expected to be finalised before March next year and the infusion of the funds would be made in two tranches.

The first of the two tranches worth about $300 million is expected to come before March and the next before March 2009.

Sources said that until now, Kingfisher Airlines was running on debt which is worth about Rs 1,200 crore. Before the boards of Deccan Aviation and Kingfisher Airlines decided to merge the airlines, Kingfisher was looking at shedding between 30 per cent and 40 per cent equity stake to the investors.

Part of the $550 million will be used to wipe out losses which were worth about Rs 580 crore as of March, 31, 2007.

The rest will be used to fund expansion plans of the airline.

Sources said despite losses, the airline has been able to achieve most of the milestones set by its board. The airline is expected to post cash profit during December for the first time since it started its operations while it is expected to post profits on EBITDA (earnings before interest tax, depreciation and amortisation) basis sometime during 2008-09.

More Stories on : Airlines | Overseas Borrowings | Mergers & Acquisitions

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