We have huge cash flow: Vijay Mallya
Prohibitive oil prices that have forced most airlines to reduce capacity or curtail number of flights, seem to have had no impact on the UB Group. Vijay Dutt reports.business Updated: Jul 16, 2008 23:10 IST
Prohibitive oil prices that have forced most of the airlines to reduce capacity or curtail number of flights, seem to have had no impact on the UB Group Chairman Vijay Mallya whose expansion programme and acquisition of latest aircraft for his commercial air operations continue. “I have a huge cash flow available,” he told HT.
Nor does the credit and oil crunch seem to have dampened the interest in purchasing civil and fighter planes, specially of Middle Eastern countries.
The number of the top-range Mercs, seven-series Audis and Lexus’ unloading men with serious faces and in designer suits flocking in various Chalets like that of the Airbus at this years Farnborough Air Show—celebrating its 60th anniversary—testified to the immense capacity and eagerness of the buyers the world over to acquire the latest planes and fighters.
Etihad ordered 20 A-320s, 25 A-350 and 10 A-380. It also ordered 45 planes—35, 787s and 10, 777s. The total order is worth $43 billion, based on list price. Saudis and Qatar too are on a buying binge. The star attraction, occupying the most central and visible space at this celebrations marked Air show was Airbus A-380 next to which was parked Airbus A330-200 with Kingfisher emblazoned in large red letters. Naturally Mallya's plane attracted equal attraction and was much talked about for the luxury it offers and the bar lounge— the only Indian carrier to have it—it has in between two compartments of First Class.
Mallya said his airline was not as vulnerable to the spiralling fuel prices as other Indian airlines. Referring to his offer to buy SpiceJet, he said he discussed the prospect with the management of the budget airlines, but the airline had demanded a price that he was not ready to pay. “I do good deals and I won't do expensive deals.”
He said his airline, which has received certification from the government of India, will be able to fly to 13 countries in the Middle East and Southeast Asia.
He stressed that the losses suffered by the Indian aviation companies were more due to the prohibitive tax on Aviation Turbine Fuel. “Even at oil prices of $140 a barrel, we would have been able to break even,” he said and added he did not agree with the assessment by Jet Airways chairman Naresh Goyal that Indian carriers have 30 per cent excess capacity flights. “He does not know how to do his math,” he said and added that each route capacity had to be assessed specifically.
Mallya, who has himself designed seats for his newly-acquired plane, said that his airline has slowed induction of planes for 2009 and would accelerate the process in 2010, when he hopes the current fuel crisis would have blown over. He will soon be receiving the first of the five A380 he has ordered.
Daily flights to London, from Bangalore and Bombay, will start between August 27 and September 3, and Bangalore-San Francisco non-stop flight would also go ahead soon.