Deccan Aviation to get US$ 100 mn under the term sheet arrangement

Mumbai, Oct 13 (UNI) Deccan Aviation, which runs the low-cost airline 'Air Deccan', today announced that it sold rights to future aircraft deliveries to a special purpose vehicle (SPV) funded by two European banks for US dollars 100 million.

Announcing this, the company said it has placed orders for 60 Airbus A320 aircraft for delivery over seven years and transferred the rights to Cayman Island-based South Way Aircraft Trading Ltd, to be funded by UK's Investec Bank and Germany's HSH Nord Bank AG.

''The deal would go a long way in ensuring Air Deccan's financial stability and insulating us from the turbulence in the domestic aviation industry,'' Air Deccan Managing Director G R Gopinath told reporters via video conference from Bangalore.

It had already received the first tranche of USD 30 million, he added.

The cash flow worth USD 100 million would go straight to the company's profits, according to its Finance Director Mohan Kumar.

Deccan Aviation would have the freedom to own any of those 60 aircraft on its books. Also, if Deccan did not take the aircraft for its use, the SPV would be free to sell them and recover lenders' investments.

''This transaction does not dilute the company's equity. It does not add to the interest costs,'' Mr Kumar said.

Deccan Aviation reported a net loss of Rs 340 crore for the 15 months ended June this year.

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