Lingamaneni Rajasekhar, the Managing Director & CEO of Indian conglomerate, LEPL Group, says his firm is planning to dispose of a stake in its Air Costa (Vijayawada) subsidiary to help raise funds for the purchase of three E190s, scheduled to arrive between September 2015 and January 2016.
According to India's Economic Times, Air Costa is in the process of being spun off off from LEPL in anticipation of an undisclosed private equity investor buying into the carrier in the next three months. However, while an Andhra Pradesh high court has given the move the greenlight, India's Directorate General of Civil Aviation (DGCA) has yet to do so.
Launched in October 2013, Air Costa operates two E170s leased from Ireland's ECC Leasing and two E190s leased from GE Capital Aviation Services Limited (GECAS). In March, Chief Financial Officer Vivek Choudhary was quoted as saying the carrier would lease two additional EMB-190s during August and September of this year to help expand its operations that are currently limited to the southern Indian cities of Ahmedabad, Hyderabad International, Chennai, Bengaluru International, Coimbatore, Jaipur, Tirupati, Vijayawada and Vishakhapatnam.
"We are keen on cities like Lucknow, Guwahati, Bhubaneshwar and Delhi International, among others. Many new players are focusing on Tier-II cities but our USP (Unique Selling Point) is that we have the first mover's advantage in many of these centres," Choudhary told the Times of India.
Despite ambitious growth plans which saw it order fifty E-Jets E2s with an additional fifty purchase rights last year, Air Costa has struggled financially posting a INR900 million (USD14.1 million) loss for the first nine months of its 2015 Financial Year. As such, it has attempted to cut costs by tweaking its network and fleet utilization while improving its overall operational efficiency.
