The Hindu : Business : Kingfisher Airlines to acquire more aircraft

Online edition of India's National Newspaper
Sunday, Dec 19, 2004

Business

Business

Kingfisher Airlines to acquire more aircraft

By Our Staff Correspondent

The Chairman of UB Group, Vijay Mallya (left), with the Chief Commercial Officer, Airbus, John Leahy, at a press conference in Mumbai on Saturday. — Photo: Paul Noronha

MUMBAI, DEC. 18. Kingfisher Airlines today announced that it has signed contracts to acquire a total of 30 new Airbus A320 aircraft with a market value of up to $1.8 billion or Rs. 8,100 crores. These aircraft are in addition to the four A320 aircraft already leased from Debis Air Finance.

Kingfisher has signed the purchase agreement for four A320s and has exercised six options making a total of ten A320s on firm order with options for a further 20 new aircraft. The company expects to take delivery of these aircraft at the rate of nine per annum until 2008 with the first delivery expected in April 2005. It will operate a fleet of eight new Airbus A320 aircraft in 2005 and plans to add another eight A320s in 2006.

"As the soon to-be-all new A320 fleet operator in the world, we're very proud to secure 34 Airbus A320 aircraft for our start up and growth plans," said Vijay Mallya, Chairman, Kingfisher Airlines. The launch of services depended on the delivery schedule of Airbus, which commences from April 2005, he added.

Kingfisher has already leased four brand new A320 aircraft from Debis Air Finance based in the Netherlands. "Debis is a significant investor in Kingfisher Airlines with over $200 million assets placed," said Anil Mehta, Executive Vice President, Global Aircraft Marketing of Debis Air Finance.

The UB Group, of which Mr. Mallya is the Chairman, had ventured into civil aviation — one of the first private sector players to do so — under the brand UB Air in 1990. Mr. Mallya said the Indian aviation sector had been witnessing robust growth since mid-2004."Kingfisher Airlines is uniquely different. The aviation sector growth goes with the gross domestic product growth. The potential of the sector can be gauged from the fact that of the 1.1 billion Indian population, only 14 million are air travellers whereas Malaysia with a 35 million population has the same number of air travellers as us. Consider also that the Indian railways carry 14 million passengers a day. The civil aviation sector has grown by 30 per cent in the first three quarters of the current year in terms of passenger traffic and there is a lot of scope for growth."

On the basis of having all 174-seater aircraft with six trips per aircraft per day and a passenger load factor of around 70 per cent, Kingfisher is looking at 750 passengers per day per aircraft. The airline will also do away with the segregation of classes — economy and business — and will offer one uniform class.

Kingfisher has a paid-up capital of Rs. 60 crores and this will go up to Rs. 160 crores by January 2005.

"Typical for airline financing, we will secure ECA financing. We are not looking for equity investors and can finance the first year of operations comfortably. Towards the time of having to raise higher capital, we will take the company public," said Mr. Mallya.

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