The Hindu Business Line : Deccan Aviation bid to mop up $75 m to fund aircraft purchase

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Bangalore Feb. 2 Deccan Aviation, which runs Air Deccan, is planning to shed up to 15 per cent stake to mop up another $75 million for funding new aircraft purchase.

During the current calendar year, the airline is expected to have cash of around $95 million, apart from the $75 million it plans to get from new investors. This is expected to be utilised over the next two years.

In another development, the company's Chief Financial Officer, Mr Mohan Kumar, who took Deccan Aviation through an IPO and was the architect of some of the industry's innovative financial deals, has put in his papers. He will be replaced by Mr Ramki Sundaram, who was with Investec Bank, a UK-based bank, which has around 2 per cent stake in Deccan Aviation. Last year, the airline signed a financial structuring deal with Investec Bank as well as Germany based HSH Nord Bank AG to raise $100 million.

Cargo foray

Mr Mohan Kumar will continue to be associated with Deccan Aviation as an advisor. The airline is also drawing up a plan to start its cargo service. Mr Mohan Kumar is expected to assist in developing a new model for the cargo foray of the airline.

A source close to the company told Business Line that Edelweiss Capital has been appointed to look for investors for raising $75 million. The source said the airline would be willing to shed up to 15 per cent if it can get a strategic investor on board. The airline plans to utilise these funds for funding eight ATRs and four A320s during the current calendar year. The airline needs to pump in at least $20 million as its own equity for buying the eight ATRs. The airline is also expected to get at least $10 million from lease-buyback arrangement for A320s during the year. It will also get around $5 million from Airbus Industrie as fleet expansion subsidy.

Out of the $100-million funds it tied up recently, the airline has, so far, received around $60 million out of which it has utilised around $20 million. The next two tranches of the funding amounting to $100 million are expected to be released in September and December. The source said these new funds should be enough for funding new aircraft purchases during the next two years. The airline has placed orders for 81 new aircraft over the next six years. Its fleet consists of 18 A320s and 23 ATRs.