Deccan Aviation - Kingfisher Merger
Deccan Aviation, the company that owns budget carrier Simplifly Deccan, shot up 23.3 per cent on the Bombay Stock Exchange (BSE) in a falling market on expectations that UB Group chairman Vijay Mallya may be mulling a reverse merger of Kingfisher Airlines with Deccan Aviation to enable him to fly abroad.
Both airlines denied any such move. But analysts tracking Deccan said that the airline’s stock has spurted as a reverse merger will strengthen Deccan, and the value that Kingfisher will add is not factored in the price of Deccan stock today.
Kingfisher is a full-service airline and enjoys higher yields (Rs 4200-4400 per seat against Deccan’s Rs 2700-2900) though its costs are also high. A merger of the two airlines could make Deccan the airline with the largest market share (28.4 per cent), piping Jet Airways’ 21.5 per cent market share in October.
‘’The Deccan stock has flared up on rumours that the reverse merger ratio could be in favour of Deccan,’’ said an analyst with a broking house in Mumbai who did not wish to be identified. ‘’Someone has taken a call on the stock and the spurt is not necessarily based on fundamentals,’’ said the analyst.
Merger could make Deccan the largest domestic airline
