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karatecatman


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Deccan Aviation to Cut Some Routes as It Seeks Profit
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http://www.bloomberg.com/apps/news?pid=20601080&sid=aAwvdk8FmIPM&refer=asia
Deccan Aviation to Cut Some Routes as It Seeks Profit 


By Anand Krishnamoorthy


Sept. 29 (Bloomberg) -- Deccan Aviation Ltd., which posted a loss in the 15 months ending June 30, said it will stop flying some routes, as it seeks to achieve profitability by 2008.


India's largest low-cost airline is ``rationalizing some routes'' and cutting back unprofitable capacity, Warwick Brady, Air Deccan's chief operating officer, said in an interview in Mumbai today. The Bangalore-based carrier aims to carry as many as 8 million passengers in 2007, compared with 4.5 million this year, he added.


Deccan, Jet Airways (India) Ltd. and other carriers in the country are facing increasing competition, which is squeezing their margins. Deccan made a loss of 3.41 billion rupees ($74 million) in the 15 months ending June, and its stock price has plunged 31 percent since an initial share sale in May.


``We are laying the foundation for the turnaround,'' said Brady, who joined Deccan from Ryanair Holdings Plc last year. ``Our aim is to break even on as many routes as possible by cutting operation costs.'' He didn't say which routes may be affected by the plan.


Jet Airways, Deccan Aviation and other Indian carriers will probably make a combined loss of $250 million both this year and next, as they cut fares to as low as 1 rupee (2 U.S. cents), according to the Centre for Asia Pacific Aviation, or CAPA.


Redeploying excess capacity and containing costs by utilizing aircraft for longer hours can help Deccan Aviation and other airlines in India emerge from losses, said Kapil Kaul, the chief executive officer of the Indian unit of CAPA.


Long-Term Strategy


``Airlines that can restructure and withstand the problems now can be in for much better times from 2008,'' Kaul said. ``Deccan has a pan-India presence, has very large market share and if they get past this period by driving costs down, then they can reap the benefit.''


Deccan Aviation is India's second-biggest airline by market share behind Jet Airways. Air Deccan, started by G.R. Gopinath, an army captain turned silk worm farmer, has 21 percent market share in India, compared with 34 percent of Jet Airways and 19 percent of state-owned Indian Airlines Ltd., according to CAPA.


Shares of Deccan Aviation gained 1.1 percent to 102.8 rupees on the Bombay Stock Exchange today.


The airline recently sold and leased back two Airbus SAS planes and three spare engines, Brady said. Airlines benefit from so-called sale-and-lease back deals, as they get an injection of capital and no longer need to worry about the asset depreciating in value.


Similar Deals


The company will consider similar deals for more planes, Brady said. Deccan Aviation has 92 planes on order, valued at $3.8 billion, to be delivered by 2012. Most of the planes are on order from Airbus.


Deccan Aviation has postponed a plan to start overseas routes using a joint venture in Sri Lanka, Brady said. The airline was to start operations at the Sri Lankan unit from September.


``The focus now is on the turnaround,'' Brady said.


The Indian carrier today announced a $150 million maintenance agreement with Lufthansa Technik to support its fleet of 14 Airbus planes.


``Over the next ten years Lufthansa Technik and its Indian subsidiary One Stop Airline MRO Support will independently serve the fleet of all together 60 Airbus A320 airplanes with the provision of components at the carrier's hub Bangalore,'' Deccan and Lufthansa said in a joint press release issued in Mumbai.


Lufthansa Technik will be setting up a regional pool of spares in India because of the increase in demand in the South Asian country, the companies said.



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KCM
tayara mechanici


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karatecatman wrote:


Redeploying excess capacity and containing costs by utilizing aircraft for longer hours can help Deccan Aviation and other airlines in India emerge from losses, said Kapil Kaul, the chief executive officer of the Indian unit of CAPA.


Shares of Deccan Aviation gained 1.1 percent to 102.8 rupees on the Bombay Stock Exchange today.


The airline recently sold and leased back two Airbus SAS planes and three spare engines, Brady said. Airlines benefit from so-called sale-and-lease back deals, as they get an injection of capital and no longer need to worry about the asset depreciating in value.


Similar Deals


The company will consider similar deals for more planes, Brady said. Deccan Aviation has 92 planes on order, valued at $3.8 billion, to be delivered by 2012. Most of the planes are on order from Airbus.






Firstly where do these domestic airlines redeploy their fleet, while restricted to the dom market they will create further excess capacity by redeploying these a/c on lucrative routes.


There is something not right here, DN has claimed a loss of $74m, in his statements the CFO has been mentioning acquisition related costs as the reason for the losses. If they have capitalised the assets thru Sale, they should have raised at least $100m, why not show it on your books ?


Can any financial experts throw some light on DNs latest transaction where they have raised $100m thru term loan. is it possible the proceeds from the sale of the 2 a/c and 3 engines could have been deposited in a bank against an acct other than DNs and loan raised against this amount ?



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karatecatman


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www.uninews.com


Air Deccan suspends flights to Kanpur, Nasik, Surat


 New Delhi, Sep 29 (UNI) Air Deccan, India’s first and largest low cost carrier, today said it was discontinuing services to some unprofitable routes to cut losses that are mounting due to high fuel costs.


 Deccan Aviation Ltd, the airline’s promoter which posted Rs 340 crore losses for the 15 months period ending June, would suspend flights to Kanpur, Nasik and Surat, its Managing Director Capt G R Gopinath told PTI.


 ‘‘When we operate such a large fleet, we are bound to pull off from some places’’ that are not economically viable, he said, adding that it would increase services to other sectors next month.


 Capt Gopinath said service to Kanpur was suspended due to the poor condition of the airport there, while Nasik and Surat were ticked off due to low load factor on these routes.


 Air Deccan had earlier attributed the losses to absorption of fuel costs in the last eight to nine months.


 ‘‘There is a method in this madness (in absorbing the increase). We have a robust model. The strategy was to get the largest market share,’’ Capt Gopinath had said, adding the Rs 340 crore loss can be considered as expenditure to build the market.



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bom23


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Not sure about Kanpur but I am not surprised with Surat and Nasik. The Surat flight was known to return back to Mumbai more often than landing at Surat!!


As for Nasik, the flight times were quite inconvinent. I say so because most of the targetted travellers would have proceeded to ahead to Shirdi and DN could have used the popularity of this shrine town to arrange for more convinient timings. Traffic only for Nasik would be very low because it only takes about 2.5 to 3 hours to reach Nasik from Mumbai compared to approx 2.5 hours by flight (1 hour check in at Mumbai - 35 min flight time and 55 min from Nasik airport to town).


Thanks


 



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the_380


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DN operates to a number of destinations which do not have strong load factors...


Really DN has been eyeing on Lalu's trains



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