Is Air Deccan ready for a makeover?

New Delhi: Is India's first low-cost airline Air Deccan about to take off with a new pilot on board? Could the process of finding new investors trigger a management change at the cash-strapped airline?
Two years after hiring a Chief Operating Officer, is the founder of Air Deccan, contemplating handing over management to a professional team altogether? Well yes, or at least that is what Captain Gopinath told CNBC-TV18 not so many months ago.
But it may happen faster than that, catalysed by the fact that cash-strapped Air Deccan is looking to raise USD 100 million from a private placement of shares. Now what does that have to do with professional management? One reason is to attract new investors, who may have more confidence in a professional CEO. The other is a possible shift in management control.
To raise $100 million or Rs 410 crore, Air Deccan would have to, at current market value, issue 2.9 crore new shares. This translates into a 22-25% stake. If the stake placement brings in a a single large investor, then it is possible that the investor will become the single-largest shareholder in Air Deccan, with majority Board presence as well as control. After all the promoters together own just 22%.
So, theoretically, the private placement could also trigger a change in managment.
22/05/07 CNN-IBN

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Categories: Air Deccan May 2007