NEW DELHI/BANGALORE: GR Gopinath, vice-chairman of Kingfisher Airlines, is believed to be considering an offer to buy back Air Deccan as he is reportedly unhappy over the alliance Kingfisher has struck with Jet Airways.

Some sources said he might even offer to buy Kingfisher itself at a meeting of the airline board on Wednesday. Some overseas investors are reportedly backing him in this effort.

That, however, is not easily possible. For starters, UB Group chairman Vijay Mallya has 65% share in Kingfisher, making it impossible for anyone to make a bid unless he is willing to sell out. He is not. “I spoke to Capt (Gopinath) out of courtesy about the alliance with Jet. He was in Andamans. He said he was happy with the arrangement (with Jet) and the synergistic benefits,” he said.

“I hold 65% stake in the airline. If there is a so-called bid, we will see it off when it is made,” Mr Mallya told ET. According to the latest stock exchange filings, Mr Gopinath has 5.58% stake, and may control about 9-10% shareholding along with his associates. “The deal with Jet is beneficial for shareholders of both the airlines as it would result in a synergistic benefit of roughly Rs 1,500 crores a year. And, as the two airlines co-operate to rationalise costs and improve profits, both the airlines will pass on the benefits to the consumers as well,” he said.

When contacted, Mr Gopinath declined comment on the possibility of a buy back. He, however, confirmed he would meet Mr Mallya and discuss specifics of the proposed alliance with Jet.

Mr Gopinath, according to some sources, was upset that Mr Mallya had abandoned the low cost model post merger with Kingfisher and that, because of that, Kingfisher Airlines (formerly Deccan Aviation) had lost on passenger volume and a significant proportion of the market share.

Kingfisher countered this by pointing out that the total number of passengers carried by Kingfisher Red, the rebranded name for the low cost airline, in September was 3.29 lakh, which was higher than JetLite at 2.43 lakh and SpiceJet at 2.13 lakh. Further, Kingfisher Airlines, as an entity, carried 7.38 lakh passengers, more than 7 lakh carried by Deccan Aviation in the same period last year.

It is understood that the potential investors backing Mr Gopinath include aircraft leasing companies and private equity players. They are willing to bankroll the Air Deccan founder in case he could negotiate a deal with Mr Mallya for buying back the low-cost carrier. Since valuations have hit rock bottom following the Wall Street meltdown, it is felt that Air Deccan would be an attractive buy now. Industry leaders are of the view that the potential for an aggressive budget carrier are bright following the Jet-Kingfisher consolidation.

“In case Mr Mallya doesn’t have a good plan for Kingfisher Red (formerly Air Deccan), Mr Gopinath may propose to buy back the country’s first budget carrier,” the sources said.

About six months back, a Middle East-based NRI businessman, who holds a permit to operate regional airline, approached Mr Gopinath to spearhead his aviation venture. Citing pre-occupation with his proposed cargo airline and a cargo hub in Nagpur, the Air Deccan founder turned down the offer.

Deccan Cargo, the company floated by Mr Gopinath for air cargo business, plans to invest around $25 million in the first phase to set up its base in Nagpur.

source: Economictimes

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