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Kingfisher-Air Deccan to save Rs. 300 cr.

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FLYING TOGETHER: Vijay Mallya (left), Chairman, UB group with Capt. G. R. Gopinath, Chairman, Air Deccan at a press conference in Mumbai on Friday.
FLYING TOGETHER: Vijay Mallya (left), Chairman, UB group with Capt. G. R. Gopinath, Chairman, Air Deccan at a press conference in Mumbai on Friday.

Staff Correspondent

The carriers see opportunities in maintenance, repair and overhaul (MRO) facility

  • Combined fleet strength will go up to 71 aircraft
  • To announce open offer for 20 p.c. next week
  • MUMBAI: The Kingfisher-Air Deccan group is looking to exploit all opportunities to save costs and reap the benefits of synergistic operations at the earliest. Addressing the media on Friday, Vijay Mallya, Chairman, UB Group, said, "the Kingfisher-Air Deccan group will work closely to save on costs and, in fact, in our first full year of operations, we will save up to Rs. 300 crore on costs."

    Mr. Mallya said the open offer to acquire the 20 per cent stake in Deccan Aviation would be announced next week. "There is no honeymoon period for a re-think or re-evaluation. We are today planning to exploit the low hanging fruit opportunities that exist as soon as possible, so that the financial performance of both airlines can improve significantly. What is clear is that we will not sell tickets at a loss anymore or that there will be no immediate price hikes."

    Air Deccan has its own hangar in Chennai and Mr. Mallya said it was a useful tool for aircraft maintenance. "There are opportunities for line maintenance or a maintenance, repair and overhaul (MRO) facility. The group will have 41 Airbus aircraft flying and there is a compelling need for an MRO. Global companies would be interested in partnering us."

    United Breweries Holdings Ltd. (UBHL), the holding company of the UB group, will make an open offer to acquire a minimum of 20 per cent of Deccan Aviation at a price of Rs. 155 per share in compliance with Securities and Exchange Board of India regulations.

    This follows the earlier announcement that the board of Deccan Aviation has approved the allotment of equity shares amounting to 26 per cent of the expanded paid-up capital of the company to UBHL and its nominees. The new shares will be allotted at Rs. 155 per share, representing about a 10 per cent premium to the current market price of the shares of Deccan Aviation.

    The UB group Chairman clarified that as of now there was no intention to acquire 100 per cent of Deccan Aviation.The Kingfisher-Air Deccan group will be the largest domestic airline with a fleet of 71 aircraft and will straddle all segments of air travel from low fares to premium fares and offer the maximum of 537 daily flights, covering the single largest network in the country connecting 69 cities.

    On his plans of commencing overseas flights, the UB Group Chairman said the Union Cabinet was reviewing the minimum five-year rule. "Anyway, Air Deccan would meet that criteria next year and our wide-body aircraft would not just [remain] idle on the ground."


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