VCCircle

The year 2007 is the year of consolidation in Indian aviation. In April, Jet Airways bought Air Sahara for an enterprise value of Rs 1,950 crore or $464 million (see the details here). It included a cash component of Rs 1,450 crore plus Rs 500 crore worth debt liabilities (Rs 200 crore), Jet's Rs 180 crore investment in Air Sahara during Jan-June 2006 (when Jet took over Air Sahara for the first time) and the Rs 120 crore assets culled out of Air Sahara. That was the valuation for a 14-year old airline. Air Sahara's latest sales and profit numbers are not available. But an earlier report suggested that Air Sahara was to register total revenues of Rs 2,300 crore in 2005-06 with a net loss of Rs 17.5 crore.

Cut to May 31, 2007. UB Holdings has bought a 26 per cent stake in Deccan Aviation, which owns India largest low cost airline, for Rs 550 crore. That values three year old Deccan at Rs 2,115 crore ($522 million). The shares have been bought at Rs 155 a share.

Deccan has a fleet size of 41 aircraft, flies to 65 destinations, and has 350 daily flights, and a market share of 22 per cent. UB's Kingfisher has 30 aircraft, flies to 29 destinations, 187 daily flights and a 10 per cent marketshare. The combined share of Deccan and Kingfisher will be 32 per cent versus Jet Airways' 25 per cent.

As for the financial numbers, Deccan Aviation is making huge losses. In the three month period ended March 31, 2007, Deccan had a gross income of Rs 437.82 crore, while the net losses were Rs 213 crore.