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News > Air
Deccan not low cost any more: Vijay Mallya |
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| After Kingfisher Airlines announced buying 26
per cent stake in Air Deccan, UB Group Chairman Vijay Mallya
indicated fares of the low-cost carrier would go up as no one
wants to run on losses. “It may not happen immediately but we
are in business to make profits," Mallya was quoted as saying. Ruling
out the possibility of taking a 100 per cent share in Air Deccan,
Mallya said: "As of now United Breweries Holdings has picked up
a 26 per cent stake and it would make an open offer to acquire |
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a
minimum of 20 per cent to all shareholders of Air Deccan at a
price of Rs 155 in compliance with SEBI regulations next week."
UB Holdings has made an initial investment of Rs 150 crore in
Deccan Aviation and a further investment of Rs 396 crore would
be made by this month-end for 26 per cent stake.
The new shares will be allotted at Rs 155 per share,
representing around 10 per cent premium of the current market
price of the shares of Deccan Aviation.
With this acquisition, the Kingfisher-Air Deccan group will
become the largest domestic airline with a fleet of 71
aircraft--41 Airbus and 30 ATR aircraft.
The combined entity will cover all segments of air travel from
low to premium fares and offer maximum number of 537 daily
flights covering the single largest network in India covering 69
cities, taking advantage unparalled synergy benefits from a
common fleet of aircraft.
Mallya said the acquisition would benefit both Kingfisher and
Air Deccan to the tune of Rs 300-crore due to synergies the two
would enjoy in terms of ground staff, aircraft and maintenance
facilities.
This would help in reducing costs and improving profitability,
he said. The benefits will be evenly enjoyed by both the
airlines, Gopinath said. Mallya said Ramki Sundaram would be the
CEO of Air Deccan, while Gopinath would be Executive Chairman.
Mallya himself would be the Vice-Chairman.
The Board will comprise of 12 directors, with three directors
nominated by the UB group, three from original promoters and
institutional shareholders and the remaining six will be
independent.
To a question about frequent delays in Air Deccan flights,
Mallya said: "Noone has ever heard of Kingfisher flights being
delayed and with this acquisition, the situation will only
improve."
Also, the reasons for delays were manifold like weather,
congestion and handling facilities and at times, delays were due
to factors beyond the control of the airline, he said.
Gopinath added Air Deccan was not providing seat numbers to
reduce the turnover time of its aircraft, which was perhaps one
of the lowest in the world at 15 minutes for ATRs and 25 minutes
for Airbus aircraft.
With the acquisition, in the event of cancellation of flights,
passengers will be accommodated in the aircraft of either
airlines without any increase in fares.
Courtesy: IBNLIVE |
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