Royal Airways Ltd plans to raise funds to support the financing of the fleet and route expansion plans of its low cost service, Spicejet. |
As a part of this move, the company, which is listed on the Bombay Stock Exchange, is looking at a second public offer. |
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"We will look at the capital markets for funds. But this will happen only after we become operationally stable," Mark Winders, chief executive officer, Royal Airways, said. |
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The company, according to Winders, expects to be profitable in the second half of the first year of operations and become cash-neutral in the second quarter of the first year itself. |
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The carrier recently given a preferential allotment of 1.53 million unsecured fully convertible debentures of Rs 100 each to IL&FS, which can be converted to 3.7 million shares of Rs 10 each. |
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"We have companies and investors behind us who have sound financial background. We can raise funds without any problem," Winders said. |
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It is interesting to note that the Indian low-cost carrier Air Deccan had recently raised substantial funds from a group of investors including ICICI Ventures. Royal Holdings Services Ltd, a Nevada-based investment company, has a major stake in Royal Airways Ltd. |
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Foreign institutional investors like Citigroup, ABN Amro and Goldman Sachs hold over 10 per cent equity in the airline company. Royal Airways was given a no-objection certificate by the government in November last year to start operations. |
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It is expected follow a dynamic pricing model for its flights. As per this model, airfare on a particular flight are determined on the basis of the demand and availability of seats. |
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It plans to start services in the busy and lucrative Delhi-Mumbai sector, Delhi-Bangalore, Delhi-Chennai and Delhi-Kolkata sectors. Besides, it will also operate services in the non metro sectors as well. |
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The low-cost carrier, which has placed an order for 10 airplanes, is expecting start operations by mid May. Besides, with full scale operations, it expects to carry about 2.2 million passengers a year. |
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