After burning millions of dollars on domestic tracks, comes the $4 billion plan to raise cash.

IIPM Ranked No. 1 B-School In Global Exposre - Zee...

After burning millions of dollars on domestic tracks, comes the $4 billion plan to raise cash. How do they plan to spend it and what (if any) remains the sole means to save Indian aviation giants from doomsday? STEVEN PHILIP WARNER analyses…

NACIL, too, is on its way to acquire 111 more aircrafts from both Boeing and Airbus and for that matter, it plans to raise $1.5 billion, which would primarily be used for the expansion process. Besides planning a debt scheme from EXIM Bank, NACIL also has plans for an IPO. Ask Ashok Chawla, Civil Aviation Secretary, and he defensively asserts, “We’ll have to take a view on when to consider having the IPO based on the performance (of Air India), which will require the approval of the Cabinet.” Of course, he disclosed nothing about the deadline, but one thing’s for sure – NACIL can’t wait for long, if they are to keep abreast with aggressively expanding private players…

Then there are a host of private airliners – Jet Airways, for one, plans to raise $800 million. “50% of this total amount would be raised through dilution of shares through rights issue & qualified institutional placement. We’re in talks with financial institutions to finalise the finer details,” revealed a Jet Airways official. Then there is the now-Mallya run Kingfisher and Air Deccan combine, which is raising about $400 million for “overall expansion and international foray of Deccan & Kingfisher Airlines,” as G. R. Gopinath, MD, Air Deccan puts it. Interestingly, Mallya might end up diluting 15% of his stake in the merged entity. “There are talks in the boardroom that Mr. Mallya might just sell-off about 15-20% shares out of his 76% holding in the airline to raise Rs.16 billion and expand authorised capital by Rs.3.5 billion,” reveals a source in Kingfisher Airlines.

There are also other fish in this aviation sea that are willing to try their luck at the fund-raising game. Paramount Airways too plans to raise about $350 million and would absorb this sum to acquire more aircrafts to take the total count of its fleet to 47 by the year 2010. As M. Thiagarajan, MD, Paramount Airways adds, “By 2010, we would have a national presence and will get 40 more Embraer aircrafts till then. We’ll focus on one region, saturate and dominate before moving to other regions like we did in the South. We wanted to establish the brand before expansion even within the country and with our international plans we will always be a premium product offering only first and business class products when we enter Europe, the Far East and it will be a matter of fact before we fly the United States as well. We will have a global presence by 2015-16.”

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

For More IIPM Info, Visit below mentioned IIPM articles.
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM - Admission Procedure
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!