Deccan Aviation, UB Group deny merger moves

03 May 2007

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Bangalore: UB Group and Deccan Aviation Ltd have denied media reports that Kingfisher Airlines Ltd may pick up a stake in Air Deccan, according to a Bloomberg report.

The report quotes Vijaya Menon, head of corporate communications at Deccan, as saying that there was no merit in the report, and also, that the proposed merger did not reflect any synergy. The report also says that Ravi Nedungadi, president and chief financial officer of the UB Group, has denied reports that there were any talks between the two organizations.

The denials come on the back of persistent media reports that Kingfisher, controlled by Bangalore-based UB Group, was in negotiations with Deccan to buy either a controlling stake or the entire airline.

Deccan Aviation is a pioneering, and India's largest, low-cost carrier. Kingfisher Airlines is a relatively recent entrant in India's buzzing aviation sector, and has launched itself as a full service provider.

Speculation, about a merger between the two, fuelled itself around the fact that the two carriers could likely affect the same kind of synergies amongst themselves as Jet Airways and Sahara airlines have managed with theirs. The Jet-Sahara merger followed hot on the heels of one set into motion by State-owned carriers Air India and Indian.

Industry analysts have been commenting for some time that the Indian aviation sector is likely headed for a phase of consolidation, as too many new entrants carve out increasingly thinner slices of the pie.

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