Air Costa may sell 26% stake to Qatar Airways

11 August 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}

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The Hindu Business Line: Air Costa, the Vijayawada-based airline, is in talks with Qatar Airways for an equity tie-up.
Sources in the regional airline told BusinessLine that even as Air Costa suspended its operations for a day early this month; its top management was in Doha in Qatar to negotiate the deal.
The airline resumed operations after it restructured its leasing terms with its lessor, GECAS (GE Capital Aviation Services). It had earlier leased its two 78-seater E170s from Embraer itself. Air Costa is promoted by the LEPL Group, which has interests ranging from real estate to power plants. A spokesperson for the company refused to comment on the developments.
Sources said that Air Costa is willing to sell 26 per cent equity to the foreign airline but is expected to shed a higher stake if it is able to get more funds. Last year, it was in talks with a couple of foreign investors to sell 26 per cent stake to raise Rs. 350 crore. It has placed orders for 50 new E190s worth $ 2.94 billion which are expected to start arriving from 2018.
Air Costa now has three 110 seater E190 Embraers and flies to nine destinations. It operates 35 flights daily and has already flown over 1 million passengers. By 2018, it plans to have a total fleet size of 12 aircraft and fly to 18 stations. Qatar Airways, a state-owned airline based out of Doha, has been in talks with several foreign airlines for similar tie ups to put together a network of international alliances. It has a fleet size of over 180 aircraft and flies to more than 150 destinations globally.
According to its web site, Qatar Airways operates to 13 cities in India with over 100 weekly flights and has been in talks with a few Indian airlines for an alliance. With Air Costa set to receive its pan India licence, Qatar has been keen on coming on board the airline, sources in the Vijayawada-based airline said. At one point of time, Qatar Airways was learnt to be in talks with Kingfisher Airlines but the talks fizzled out after the Indian carrier folded up. As per the civil aviation policy, foreign airlines can pick up 49 percent stake in an Indian carrier. If they want a higher stake, they can join hands with foreign funds and portfolio investors to cross the 
49 per cent barrier.

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