Air Deccan takes a new route to Aircraft Funding
Deccan Aviation has sold rights to South Way Aircraft Trading for purchase of 60 Airbus A320 Aircraft to be delivered over 7 years.
The South Way Aircraft Trading shall be funded by UK based Investec Bank and Germany based HSH Nord Bank. The rights were sold for USD 100 million and the company has already received first tranche of USD 30 million.
In case Deccan Aviation does not take any aircraft for its use, the company can sell the aircrafts in market to other airlines to recover the investments made by the lenders.
The cash flow of USD 100 million will add to the profits of the company.
Air Deccan had posted a loss of 340 crore during last financial period of 15 months ending June 2006. The addition of USD 100 million will add to the bottomline of the company and will reduce its losses further in next financial year. The amount will be received in 15 months in 4 trahches.
The foreign banks also stand to gain as they have ensured their profits on sale of 60 aircrafts irrespective of the performance of the airline.