Mallya now eyes SpiceJet

16 Jun 2007

1

Mumbai: UB group chairman Vijay Mallya, who also heads Kingfisher Airlines and acquired a 26-per cent stake in low-cost carrier Deccan Aviation, is now eying budget airline SpiceJet Ltd.

He said he is "interested" in acquiring the airline, which offers budget fares.

"I have not initiated any talks as yet. But if they want maximum shareholder value, they will look at me," he told business news channel NDTV Profit.

SpiceJet is India''s second largest low-cost airline with a market share of nine per cent. It operates over 83 daily flights in 14 cities with 11 Boeing 737-800 aircraft.

"I am certainly interested, and if you are asking me if I am talking about it, the answer is no. Am I going to get it? The answer is I don''t know," reports quoted Mallya as saying.

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

"I respect the independence of the SpiceJet shareholders and board. If they want to do something, I am sure they will invite me to talk with them. If they don''t want to do anything, we will just work together because a part of my strategy in acquiring Deccan Aviation was to make sure that the industry becomes more profitable and that everybody works together to achieve that," Mallya said.

SpiceJet, meanwhile, said it plans to sell 16 Boeing 737 aircraft for more than $1.1 billion to Nomura Babcock & Brown Co Ltd., and lease them back again.

It had concluded a similar deal with the investment banker for four aircraft earlier this year.

SpiceJet had placed orders for 20 B-737 aircraft and deliveries would be made over 22 months beginning January 2007.

The sale would be effected on delivery, the company said in a notice to the stock exchange. Airlines typically book a profit of between $2 million and $4 million by sale and lease back of each plane, aviation industry players said.

More and more airlines are resorting to sale and lease back of planes to fund expansion in a fast-growing market amidst rising oil prices and increased competition.

Deccan Aviation Ltd has closed deals for four Airbus A-320 planes, while top domestic carrier Jet Airways Ltd sold and leased back five aircraft in April.


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