Paramount joins the hunt: GoAir most likely candidate

06 Jun 2007

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New Delhi: Premium service provider, Paramount Airways, has confirmed that it is looking for a total buy-out of an airline to advance its business expansion plans. The announcement enforces the impression that the country's aviation sector is now in the throes of a full-fledged consolidation drive, coming as it does on the heels of Kingfisher picking up Air Deccan just last week.

The country's civil aviation sector is already showing a marked change with the number of airlines in the market coming down from a high of 10 to just six. With Paramount announcing its intentions, the number is set to come down even further.

The line up of consolidated entities now includes Kingfisher-Deccan, Jet-Sahara and Air India-Indian.

M Thiagarajan, MD, Paramount Airways told CNBC-TV 18, "If we find that synergies are right, Paramount is open to acquiring an airline. The preferred way is a total buyout and will be under Paramount brand. We are looking at integrating the airline into the business model of Paramount, which is a high value carrier."

Given its stated business plans, Paramount is looking at picking up an airline that would allow it to expand in western India and industry sources say that GoAir would appear to be a suitable candidate. Not only does the Wadia-family run airline operate in the western sector, persistent market rumours would have it that it is looking for investors. Recent statements from the management also tend to strengthen this impression.

GoAir has existing infrastructure in airports at Mumbai and Goa, which Paramount can look forward to capitalize on. GoAir's fleet of Airbus aircraft could also be disposed off by Paramount at a premium, given the desperate demand for new aircraft around the world.

Also, industry sources point out, at a time when airlines are scrambling for additional slots at airports, as they seek to expand operations, GoAir has turned down the opportunity to pick up additional slots at New Delhi. Apparently, it has even turned back three new planes.

Thiagarajan's announcement comes on the back of Paramount placing a massive $2 billion order for 40 aircraft with Brazilian aircraft manufacturer Embraer. Thiagarajan also said that it would like to make a buy-out sometime in the coming year, and finance the deal through a mix of debt and internal accruals.

Paramount Airways plans to expand its fleet size from five to 60 by the year 2011.

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