AirDeccan plans to raise $40 mn more

Says 'No' to foreign airline as equity partner.

In its second round of fund infusion, no-frills airline AirDeccan is looking at raising $40 million by July 2004. The company has also dropped the idea of roping in a foreign airline as an equity partner even if the government allows it.

"Our business has been good and we are expanding our operations nationwide. To sustain operations and to expand links, we will be raising around $40-50 million this time. We expect to sign the deal by July," AirDeccan Managing Director G R Gopinath told Business Standard. In its first round of funding, the airline had sold a 10 per cent stake to a Mauritius-based fund for $5 million.

On how much stake the company would divest this time, Gopinath said: "It depends on how much the strategic investor values our shares. We are talking to 3-4 global investors who have invested in no-frills airlines in other parts of the world."

On the airline's decision not to seek investment from foreign airlines if and when the government permitted it, Gopinath said: "We feel more comfortable with strategic financial investors. Anticipating a green signal from the government, a couple of foreign airlines have approached us for becoming equity partners. But we are unlikely to go for it even if the government allows foreign airlines to buy into Indian ones. Usually, overseas airlines press for their branding or some sort of branding arrangement, which is not acceptable to us."

We have a strong brand in AirDeccan and we do not want to dilute it."

The airline recently bought seven Airbus aircraft to fly to major cities in the country. Till now, AirDeccan had restricted itself to southern India.

"Once we connect to Delhi, Mumbai and Kolkata, we will be able to branch out to smaller cities from there. There is immense potential for an airline of our kind and we will leverage this to the hilt," added Gopinath.