Paramount to buy 40 Embraer planes for $ 2 bln

New Delhi, June 5: Regional carrier Paramount Airways is close to buying 40 Embraer jets costing New Delhi, June 5: Regional carrier Paramount Airways is close to buying 40 Embraer jets costing $2 billion (over Rs 8,000 crore) at list prices, its managing director M. Thiagarajan said today.

Deliveries of new 70-seater planes are likely to be between 2008 and 2011, he said after a meeting with visiting Brazilian president Luiz Inacio Lula da Silva. The agreement will be signed next month in the Latin American nation.

Mr Thiagrajan said funding for new aircraft could be a mix of debt and equity with a balloon payment when the agreement is signed.

At present, the Chennai-based airline uses five leased Embraer jets.

It serves eight cities in the south with 52 daily flights.

Paramount, which started its operations in the second half of 2005, also plans to expand its operations across western India, said Mr Thiagrajan. ''We want to focus, saturate and dominate the southern region first, and then move on for a pan-India presence by 2011.'' He said Paramount is looking at acquiring another airline, provided synergies and valuations are right. ''We want to expand into western India later this year, and if (acquisition) opportunities arise in the west, we will be more than happy to go for it.'' Mr Thiagarajan declined to comment on the specific GoAir proposal which, investment bankers say, had approached Paramount for a deal valued at 150 million dollars (about Rs 600 crore).

With 55 to 60 aircraft in the next five years, Paramount is also expected, look into aircraft maintenance facilities. Currently most of its planes are serviced from Embraer's maintenance facility in Portugal.

The last three months have seen three mergers taking shape, including Jet Airways' acquisition of Air Sahara, a purchase of 26 per cent stake in Air Deccan by Kingfisher Airlines, and amalgmation of government-owned Air India and Indian (Airlines).

This has left smaller players like GoAir, SpiceJet, Indigo and Paramount searching for strategies to grow bigger. The only options are joining hands with an existing player or attracting a private placement to sustain the airline.

UNI