Kingfisher Air plans to buy 30 aircraft, public float in 2006

UB group promoted Kingfisher Airlines has announced the acquisition of 30 new Airbus A320 aircraft in a deal size valued at Rs 8,100 crore ($1.8 billion).

The airline, which expects to break even in its first year of operations, intends to go for an initial public offering (IPO) in 2006.

While it has currently placed firm orders for 10 aircraft with European aircraft manufacturer Airbus with an option to buy another 20 planes, to be delivered at the rate of 9 aircraft per year until 2008.

In addition to this, the airline which is yet to take wings, has already taken on lease four new A320s from the Netherland-based aircraft leasing company Debis Air France.

The airline is being floated with a paid-up capital of Rs 60 crore that would be enhanced to Rs 160 crore by January 2005, said Vijay Mallya, chairman of Kingfisher Airlines.

A part of the capital is being funded by the international agencies. The company has appointed Calyon as financial advisors to negotiate and secure financing its fleet.

"By 2006, we would have acquired 10 aircraft and when we decide to exercise the option of buying 20 more A320s, we would be going for a public issue to finance our acquisition plans."

According to Mallya, the airline with single class configuration will be positioned as "high value" passenger airline and not as a budget carrier.

This essentially means that while the fares will be higher than the country's only no-frill carrier""Air Deccan, it will be lower compared with the normal fares offered by domestic carriers such as Jet Airways, Indian Airlines and Air Sahara. The route network of the airline is yet to be decided.

Alex Wilcox, president and chief operation officer of the company said, "We intend to maintain a low cost of operation by putting in place an efficient distribution system and by ensuring better aircraft utilisation. Our new fleet will also keep maintenance cost low."