Kingfisher Continues Consolidation Trend with Air Deccan Share Acquisition
By Brian Straus, ATW Daily News | Jun. 01, 2007
The pace of Indian consolidation appears to be ramping up as Kingfisher Airlines took a significant step toward acquiring Bangalore rival Air Deccan with the purchase of a 26% stake for INR5.46 billion (US$133.6 million).
The transfer, announced in filings with the Bombay Stock Exchange, includes a promise from Kingfisher parent United Breweries Holdings to make an open offer for a further 20% of Air Deccan, the country's first low-fare carrier. The deal will make Kingfisher "probably ... the largest airline in terms of market share" in India, Air Deccan Chairman and MD G.R. Gopinath told reporters in Bangalore, adding that there were other bidders. The airline will continue to operate as an independent LCC.
The deal follows Jet Airways' purchase of Air Sahara and the state-orchestrated merger of Air India and Indian Airlines as a response to the crippling overcapacity in the domestic market. Kingfisher and Air Deccan will operate a combined fleet of 71 aircraft to 70 destinations, according to press reports. The Indo Asian News Service reported that Jet/Air Sahara led India in 2006 with a combined 40% share, Indian Airlines held 21.5%, Air Deccan 18.3% and Kingfisher 8.7%.
Kingfisher's Vijay Mallya reportedly will become Air Deccan's vice chairman, with Gopinath taking the reins as executive chairman. The two airlines, which each operate A320 family aircraft and ATRs, will select a new CEO jointly. Air Deccan reported a loss of INR2.13 billion in the 12-month period ended March 31, AFX News reported.