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Monday, May 07, 2007

Mallya says he's interested in Air Deccan

Vijay Mallya on Monday added fuel to speculation that Kingfisher Airlines is keen on buying into Air Deccan. ‘‘Am I interested?’’ “Yes,’’ he said at a press conference in New Delhi. ‘‘Am I imminently acquiring it? Not decided as yet..,’’ he added. Capt G Gopinath, MD, Air Deccan, didn’t take kindly to the remarks. ‘‘I’m from Mars and Vijay’s from Venus,’’ he told TOI. ‘‘We would make for a very incompatible couple. His model and mine are very different,’’ he added.

‘‘We are not for sale. We are here for a long haul. We are three times bigger (than Kingfisher) in routes and operations. He (Mallya) must restrict himself to running his own airline rather than talking about Air Deccan,’’ a visibly agitated Gopinath added.

Sources close to Mallya said the Kingfisher boss has been eyeing Deccan for a while and that he is just waiting for the right moment.

Centre for Asia Pacific Aviation (India) CEO Kapil Kaul said his agency had predicted a year ago that legacy carriers would need to acquire low cost carriers for the domestic aviation business for two reasons.

‘‘Acquiring or getting a stake in an LCC would allow legacy carriers to focus on the emerging area of budget travellers. And the legacy airline could keep catering to its clientele,’’ he said, while adding a word of caution for Kingfisher. ‘‘Air Deccan has a larger fleet size of over 40 aircraft and this talked about consolidation would have to be done well.’’

Over the last two years, Deccan has accumulated huge losses and aviation analysts believe the trend is likely to continue, as competition in the skies get stiffer. The company needs funds to keep afloat and Gopinath has been looking for new sources of funds by selling stakes to private equity players. He confirmed that he has appointed two investment bankers to help the airline raise $100 million.

Reports emerged in a section of the media that Lachmandas Ladhani, one of the original investors in Air Deccan, is looking to sell his 11% holding in the company. Ladhani, however, told TOI that while 4-5 UK-based investors have indeed approached him expressing interest to buy his stake in Air Deccan. But he hasn’t taken a call on whether he would sell, or would settle for diluting his equity.

Analysts say Deccan needs money and Kingfisher is perhaps the only airline that can foot the bill. Jet took over Sahara and will take a while to extract synergies that may accrue from this acquisition. So, it seems unlikely Jet would be interested in another play. For Mallya, acquisition of Deccan is a critical step towards his dream to rule Indian skies. Deccan is the largest no-frills airlines and flies to many small towns and cities not catered to by other carriers.

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