SpiceJet, GoAir in talks for consolidation

Delhi-based low-cost carrier SpiceJet is in talks with the Wadia group-owned GoAir for either a merger or to acquire a controlling stake.Sources close to the development said SpiceJet CEO Sanjay Aggarwal met GoAir Managing Director Jeh Wadia to discuss a deal late last month.When Business Standard contacted Aggarwal, he said: “It is true that Jeh and I travelled together. But I cannot comment on anything relating to a deal at the moment.”He said he had “said before that there is a need for more consolidation in the market and that there will be fewer carriers than at present”.Pointing out that there are several ways of organic growth, he added that “consolidation is definitely one of them, and it may take place through a merger or an acquisition”.Wadia, however, declined to comment on the issue. “How can I comment on market speculation?” he said in reply to a question on whether SpiceJet had approached his airline for an alliance. An email questionnaire sent to him was unanswered.Sources from both companies also said SpiceJet recently made an offer to GoAir Chief Financial Officer G P Gupta to join the Delhi-based airline as chief administrative officer.On February 26, Aggarwal told an international news agency SpiceJet wanted to set up a regional airline to connect smaller cities in the country.Industry experts said another advantage of a merger would be the fact that GoAir was looking at increasing its fleet to 20 aircraft by 2011, from five at present.

Mallya boards US Epic

VLJs (very light jets), small four to eight seater jets that have been creating a flutter in corporate America, have a new backer. Liquor baron Vijay Mallya is picking up a 50% stake in Epic Aviation, the Bend Oregon-based small aircraft manufacturer.

For the past two years, business aircraft circles, particularly in the US, have been bullish about the new planes that are being manufactured through disruptive technologies with new engines, avionics and materials.

Speaking to ET, he said “Epic is an outstanding global business opportunity as they have four world beater aircraft. There is a growing demand for business jets in the region, that we hope to tap,” Mr Mallya, a pilot with a multi-engined rating and close to 2,000 flying hours, flew the aircraft earlier last month. He refused to comment on the investment in the venture.

Epic has recently experienced an unprecedented surge in sales, booking orders more than $23 million at the Sun n Fun fly in April this year. It also sold aircraft worth $40 million three months later at AirVenture in Oshkosh, Wisconsin, said a company release.

(Source: Economic Times

TPG Capital eyes stake in IndiGo

Leading global private equity fund TPG Capital (formerly Texas Pacific) is in talks with budget carrier IndiGo to pick up a 10-15 per cent stake in the airline.

Top executives of the airlines have started negotiations and the deal is expected to happen in the next few months, according to investment banking sources.

"IndiGo is considering dilution of promoters’ equity and are is in talks with TPG for a possible sale of shares,” a source said. When contacted, Rahul Bhatia, managing director of InterGlobe Interprises, which owns the airline, said that the company was not looking at any dilution of promoters’ equity. “We do not have any plans to dilute equity. We have enough funds to take care of the future requirements of the airline,” he said. InterGlobe Enterprises and the former president and chief executive officer of US Airways, Rakesh Gangwal, had jointly promoted IndiGo.

However, sources close to TPG said that that the private equity firm is exploring investment opportunities in the aviation sector in the country and Indigo is one of its target companies. “As the ATF (aviation turbine fuel) prices went up and airlines were forced to reduce fares, valuation of the industry came down in 2006. Though airlines were interested in PE placements, not many players were interested. Now its the time of consolidation and global PE firms will have a major role to play," said an analyst from Lehman Brothers.

If successful, the transaction will make TPG's first aviation investment in India. TPG was in talks with Air Deccan before Kingfisher air chairman Vijay Mallya acquired a 26 per cent stake recently. The group was also in talks with SpiceJet. However, these transactions failed either due to differences over valuation or the airlines were not ready to offer a higher stake in the company.

Mallya had offered Rs 550 crore for 26 per cent stake in Air Deccan while ICICI Ventures had invested $50 million for 19 per cent stake in Air Deccan in 2005.

TPG, which manages over $30 billion assets across the world, is one among those PE players that have made substantial investments in the aviation sector. It has invested in Continental Airlines, Rynair, Australia's Qantas and has also placed a bid for Midwest Airlines.

IndiGo is expeccted to use private equity finance for its expansion plans. It has placed a $6 billion order to acquire 100 Airbus A320 family aircraft. The airline has so far received 11 Airbus A320-200 and another 89 are on order. It receives one brand new plane every four to six weeks. By 2010, IndiGo plans to serve 30 Indian cities with a fleet of 40 A 320 aircraft.

(Source: Hindustan Times)

UB planning to sell 20% stake in its aviation business

United Breweries (Holdings) is planning to sell about 20% stake in its consolidated aviation business—comprising Kingfisher Airlines and Air Deccan—to private equity investors. It hopes to raise around $250 million through the equity dilution. Four private equity giants, including Cerberus Capital, TPG and Blackstone, have initiated talks. Cerberus is believed to be the front-runner.

The stake, sources said, is being sold in a subsidiary of UB (Holdings), which owns 83% of Kingfisher Airlines and 100% of Kingfisher Radio. Kingfisher Radio, in turn, holds 26% in Deccan Aviation, the parent of the low-cost airline. The proposed open offer, if successful, will take Kingfisher Radio’s stake in Deccan Aviation to 46%.

The UB Group has already raised Rs 550 crore as debt from IDFC, HDFC and IL&FS for its purchase of Deccan Aviation. It is currently in the process of raising another Rs 430 crore to fund the open offer.

This will take its debt to around Rs 1,000 crore. Sources said the plan is to pay back the expensive debt through private equity funds. UB is waiting for Sebi’s clearance for the open offer at Rs 155 per share. Sources said the group is confident of getting participation from major shareholders, including ICICI Bank and Capital One.

Tiger Airways to launch first flight in India

Singapore-based low cost carrier Tiger Airways on Tuesday said it would start direct flights to Singapore from the city and Kochi beginning October 28.

The airliner would offer low-cost one-way fares starting Rs 1,600 from both the destinations. "We expect the aggressive ticket prices, which are nearly half of what other airlines are offering, to generate a strong demand from the region," Mr Davis, CEO, Tiger Airways said.

The airliner has established an extensive network of low fare routes across the Asia Pacific region. "Tiger Airways is now the only low fare airline to offer services across whole of Asia, encompassing China, South East Asia, India and Australia," he said.

(Source: Business Line)

Global PE players eye stake in JetLite

Naresh Goyal-promoted Jet Airways is believed to be in preliminary talks with leading international private equity players for offloading a minority stake in JetLite, the name given to Air Sahara that it acquired three months ago for Rs 1,450 crore.

Global investment companies and equity funds like Dubai-based Istithmar PSJC, US private equity firms Texas Pacific Group and Blackstone and Singapore’s investment holding company Temasek Holdings have been approached by merchant bankers associated with the talks.

Sources close to the development said Jet Airways, which is readying itself for a $400 million rights issue to fund its expansion plans, may dilute up to 25 per cent in JetLite. Jet Airways Executive Director Saroj Datta, however, denied that talks were on for divesting equity.


Sources said JetLite would be profitable by October-November. The rebranding exercise has begun with Jet Airways integrating Air Sahara’s frequent flyer programme.

Meanwhile, the airline has been repositioned as a “value carrier” — that is, an airline between a low-cost and a full-service carrier. To this end, JetLite has discontinued business class operations from June and re-configured its aircraft to all-economy seats.

(Source: Business Standard )

Thales in pact with Rudradev Aviation

India's Rudradev Aviation has inked a $60 million deal with European aviation electronics major Thales to acquire flight simulators for a centre that will train pilots for the country's booming aviation sector as well as Southeast Asia and West As ia.

The four simulators and other training devices will be installed in a new aviation training centre that Rudradev is building in Chennai.

(Source: Business Line)

Update: Spice Jet denies move to offload stake

Low-cost carrier SpiceJet, which is being eyed by other airlines including Vijay Mallya's Kingfisher, on Monday denied any move to offload stake and said it has adequate funds to fund its expansion plans.

"SpiceJet would like to reiterate there is absolutely no plan to sell any stake in the company to anybody. It is one of the best funded airlines in the country with a large cash reserve to fund its expansion," an airline spokesperson said in a statement.

(Source: ET)

Mallya approaches SpiceJet cautiously

Liquor baron Vijay Mallya’s thirst for low-cost airlines seems to have become insatiable. Kingfisher is now planning to spread its wings once again, by targeting SpiceJet.

After gulping down 26 per cent of the country’s largest low-cost airline, Air Deccan, the promoter of Kingfisher Airlines has dropped hints that he is interested in acquiring a stake even in Delhi-based budget carrier SpiceJet.SpiceJet is India's second largest low-cost airline with a market share of nine per cent. SpiceJet operates over 83 daily flights in 14 cities with 11 Boeing 737-800 aircraft.

The Indian aviation industry has already seen several mergers with Jet Airways taking over Air Sahara and the Indian Airlines being merged with Air-India. Mallya’s latest move is part of the consolidation taking place in the Indian skies.

(Source: CNN IBN)
(Contributor: Varun Gupta, Irevna Research Services)

Jet eyes stake in SpiceJet

Barely two months after the Air Sahara acquisition, Jet Airways, the country’s largest private airline, is interested in SpiceJet, the Delhi-based budget carrier.

Sources close to the developments said Jet is eyeing the stake of the Kansagra family-promoted Royal Holding Services and Gulf-based investment house Istithmar PJSC, which hold around 13 per cent each in the airline.

Jet Airways combined with JetLite (earlier known as Air Sahara) has a 29.3 per cent market share, but trails behind the Kingfisher Airlines and Air Deccan combine.

An acquisition of SpiceJet, which has a market share of 8.2 per cent, could push up Jet’s share to 37.5 per cent, which would be way ahead of the Kingfisher-Air Deccan combine’s 30.2 per cent.

Besides domestic coverage, a SpiceJet acquisition would result in synergy of engineering, pilots, maintenance, training and other operations.

(Source: Business Standard)

Paramount Airways woos GoAir for buyout

Update: GoAir may be open to divesting around 40% stake even as the south-based Paramount Airways has placed a $100-150 million cash buyout proposal to the former. The Chennai-headquartered premium service carrier could lace it with a stake offer to the Wadias in the merged company, sources said.
(Source: ET)
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Madurai-based Paramount Airways is interested in acquiring the Mumbai-based budget carrier GoAir, promoted by the Wadia group.

Sources close to the developments said the investment bankers of Paramount Airways have expressed their interest and initiated discussions with GoAir representatives. The talks, however, have not made much headway as yet as GoAir is reluctant to move ahead.

Paramount Airways, which currently operates only in south India, has firmed up plans to enter the western region. GoAir has only four leased aircraft but Paramount is more interested in its slots, parking bays, pilots and other infrastructure, sources said.

GoAir had earlier indicated its plan to dilute 26-40 per cent equity through a private equity placement.

GoAir's Wadia calls this a baseless speculation.

(Source: Business Standard)

Air India eyeing Serbian airline

After surviving all bids at privatisation, Air India and Indian, the two merging state-run carriers, are bidding to buy controlling stakes in Jat Airways, Serbia’s national airline.

This is the first time in its history that Air India is looking at buying another airline , let alone an international flagship. The only other contender for acquiring Jat Airways—formerly called Yugoslav Airlines—is Russia’s national carrier Aeroflot, which has already made a competitive bid for the offer.

Kingfisher acquires 26% in Air Deccan

Update:United Breweries Holdings has picked up a 26 per cent stake and it would make an open offer to acquire 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.

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

(Source: ET)


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Vijay Mallya, the flamboyant and aggressive king of spirits, is believed to be buying Air Deccan, India’s leading low-cost airline, in a move that would make him the country’s biggest aviation player by marketshare. Air Deccan will retain its low-cost status while Kingfisher will run as a full-service airline. Captain GR Gopinath, CEO of Air Deccan, flatly denied any deal was in the offing with Kingfisher.

Markets have given a thums up for the deal. Deccan, operator of India's biggest low-fare airline, gained as much as 7.6 per cent and Mallya's United Breweries Holdings rose 8.5 per cent.