Monday, May 03, 2021

Air Costa plans to raise funds through stake sale; to add three more Embraer aircraft

Mumbai: Air Costa will take three more Embraer aircraft in its fleet between September and January and plans to raise funds through a stake sale to a private equity investor in the next three months, the director and chief executive of its parent LEPL Group said on Saturday.

The Vijaywada-based regional carrier currently has four Embraer jets -- 67-seater E-170s and 112-seater E-190s -- and operates 34 daily flights to south Indian cities from Vijaywada and Chennai. It started operations in October 2013.

"We plan to get three more of the E-190s," LVS Rajasekhar told ET. Experts have critiqued Air Costa's decision of getting two different sized planes in such a small fleet, adding it would raise maintenance costs. Rajasekhar said after a year, the airline may consider phasing out the E-170s. It has also ordered for 50 Embraer E-2 jets, the deliveries for which will begin in 2018.

Industry experts have also said having Vijaywada as a base will be detrimental to an airline, and it should have set up base at one of the metros. But Rajasekhar defended his choice.

"Vijaywada is the capital of Andhra Pradesh. Earlier, we had some small issues in setting up a team here but that is all sorted." The government in its socio economic survey document has selected the airport at Vijaywada, apart from Tirupati and Rajamundry to be modernised. Rajasekhar said the airline plans to shift one aircraft to the Vizag airport. The Andhra Pradesh state government also has Vizag in its radar and plans to build a greenfield international airport at Bhogapuram near the city, the local finance minister Yanamala Ramkrishnudu said in March.

Air Costa posted a loss of Rs 90 crore in the first nine months of FY15. The airline has been trying various cost cutting measures through more efficient operations and plane maintenance as well as tweaks in its network. It has, however, recently seen the exit of 2-3 executives from the top and middle management, including its vice president commercial and airport services R. Pramod, sources said. At least six pilots left the airline recently, they added.

03/04/21 Anirban Chowdhury/Economic Times

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