Aviation cos set to tap IPO market to fund expansion

Mumbai: With stock markets rocking, a clutch of aviation firms led by Air Deccan, Kingfisher Airlines and the two state-owned airlines, Air-India and Indian Airlines, are set to tap the booming IPO market to raise funds for their expansion plans, but analysts remained cautious on the investment prospects in the sector considering the rising fuel costs, stringent competition and wafer-thin margins.
Several other smaller players such as Coimbatore-based Paramount Airlines, Mumbai-based GoAir are also likely to consider IPOs in future to meet the fund requirements arising out of fleet acquisitions and expansion of operations.
Air Deccan plans to mobilise over Rs 400 crore by offering 2.45 crore shares through the IPO at a price band of Rs 150-175 per share. Kingfisher, a part of the Mr Vijay Mallya-promoted United Breweries Holdings Ltd, hopes to raise Rs 900 crore through a combination of IPO and private placements.
Analysts estimate domestic airline companies to mobilise over Rs 2,000 crore in the next 12-16 months through the IPO route.
They said the low-cost airlines are likely to perform below par in the near future, though there could be growth prospects over the long-term.
10/05/06 Hindu Business Line

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