Air India expected to unload 15% stake in IPO

State-owned Air India will likely unload 15 per cent of its equity in an initial public offer (IPO) when its merger with domestic counterpart Indian Airlines is completed. The government has said it is merging the two airlines in a bid to create a "world-class airline" that can compete globally and domestically. Singapore Airlines and Emirates have already expanded into India's booming travel market.

The IPO would be staged once the merger of Air India and Indian Airlines was finished and both airlines' operations were fully integrated.Air India is the nation's biggest international carrier and Indian Airlines is the second-largest domestic airline after privately run Jet Airlines.

The merged airline will fly under the brand of Air India domestically and internationally with a combined fleet size of more than 112 aicraft - comparable to the best airlines in the Asian region.

Read more in The Economic Times article.

Centre postpones national airline IPO

The Centre has decided not to proceed with an IPO for the national carrier till the company formed by merging Air India and Indian Airlines is able to deliver a good financial performance and attract a good price. While IA has been making losses for years, AI has not been able to touch the record profit level of Rs 333 crore of 1992. In the past five years, the Maharaja has been making profits in the range of Rs 110 crore and Rs 14 crore on an equity base of Rs 153 crore.

So in the interim, the government has decided to offer a 5% to 7% equity to employees as ESOPs. The ministry is going to move for Cabinet approval for this in coming weeks. “The merger has left some employees unhappy. By making them feel as owners of the new carrier, we want to enlist their full support in the proposed turnaround of AI,” said the official. Meanwhile, National Aviation Company of India Ltd (NACIL) (formed by merging AI and IA) is hoping for major savings with proposed route rationalisation.

Read more in The Economic Times article.

Indiabulls Real Estate raises $400mn via GDRs

Indiabulls Real Estate (IREL), Delhi-headquartered property developer, has raised $400 million selling global depository receipts (GDRs), just over three-months after it was separated from parent Indiabulls Financial Services.

The GDRs were priced at $10.32 apiece (nearly Rs 412), a discount of Rs 41 (about 9%) a share compared to the prevailing share price of Rs 452.95 on the Bombay Stock Exchange today.The money raised by IREL includes $40 million from an over-allotment option as demand outstripped supply.

In May, group company Indiabulls Financial Services raised $275 million through a GDR issue.

Merrill Lynch & Co was the sole book-runner for the GDR. The fundraising by Indiabulls Real Estate comes at a time when a slew of Indian real-estate developers are tapping the domestic and overseas markets to develop projects in world’s second-fastest growing economy.

Read more in The Business Standard article.

AI to raise $1.5 bn for aircraft

National carrier Air India, which has placed a $9 billion order to acquire 68 Boeing family aircraft, is planning to raise over $1.5 billion to fund part of its acquisition programme.

The PSU airline is also planning to adopt innovative borrowing structures, including sale and leaseback programmes, which are popular aircraft financing methods for private domestic airlines.

Air India has already floated enquiries calling for bids from banks and financial institutions for the second round of aircraft deliveries beyond December 2007 up till March 2009, and also pre-delivery payments (PDP) for aircraft and spare engines to be delivered during 2008-09.

The airline will have to pay 15 per cent of the total agreed amount as advance in the form of PDP and 85 per cent as delivery financing.

Read more in
The Business Standard article.

Paramount Airways woos GoAir for buyout

After Air India-Indian Airlines, Jet Airways-Sahara and Kingfisher-Deccan Aviation, another aviation merger is in the air.

Madurai-based Paramount Airways is interested in acquiring the Mumbai-based budget carrier GoAir, promoted by the Wadia group.

Sources close to the developments said the investment bankers of Paramount Airways have expressed their interest and initiated discussions with GoAir representatives. The talks, however, have not made much headway as yet as GoAir is reluctant to move ahead.

Paramount Airways, which currently operates only in south India, has firmed up plans to enter the western region. GoAir has only four leased aircraft but Paramount is more interested in its slots, parking bays, pilots and other infrastructure, sources said.

GoAir had earlier indicated its plan to dilute 26-40 per cent equity through a private equity placement.

Read more in The Economic Times article.

Air India-Indian combine may hit market next year

The government on Tuesday said the merged national carrier, Air India, would wear a new look and logo. The merged company would go in for an initial public offer in 2008.

Giving details on how the merged entity between Air India and Indian would look, civil aviation minister Praful Patel said the brand, Air India, has been retained for its global and national recognition. “It will use the Maharaja as its mascot and a combined logo of the two merged airlines,” he said. The logo of the new airline is a combination of the flying swan from Air India and the ‘Konark chakra’ from Indian’s logo.

The design components of the new logo and livery have been drawn after merging some of the current features of both Air India and Indian. Mr Patel said the merged entity would start combined operations from July. The new company, National Aviation Company, would have its registered office in Delhi, while its corporate office would be located in Mumbai.

The merged airline would have a fleet size of over 100 aircraft. The minister said the new entity would add 25 new aircraft over next year, starting July this year. The new planes would have in-flight services comparable to international airlines, with the latest entertainment systems on board.

Read more in The Economic Times article.