It’s a strange predicament. Captain GR Gopinath, who made air travel affordable in the country by introducing the concept of budget carriers in the country, may not be there for long to steer Air Deccan.
Deccan Aviation, the company that owns budget carrier Air Deccan, may see a change in management once it ropes in a new strategic investor like the Texas Pacific Group or the Anil Dhirubhai Ambani Group.
Deccan is trying to raise $100 million (Rs 407 crore) and may need to dilute 25-26 per cent of its equity in favour of one of these investors, who will emerge as the majority shareholders in the company and may like to have his own CEO.
Gopinath and his associates’ own 22 per cent stake, which may come down to 16.5 per cent post-equity dilution, say industry analysts. A lot would, however, depend on the way Deccan structures the deal: it could issue new shares to the investors, some existing shareholders could sell out, or it could do both.
Gopinath could not be reached for comments but reports in the media suggest that he’s keen to continue. But analysts say Gopinath doesn’t have an option but to cede control. "When an investor has a majority share, why would he listen to Gopinath," said an industry analyst tracking the deal closely.
Warwick Brady, the chief operating officer of the airline whom Gopinath had roped in from Europe’s successful budget carrier Ryanair, is slated to join private equity firm Indigo Partners to head Mandala Airlines, which Indigo acquired last year. A Deccan spokesperson, however, has denied that Brady is leaving while Brady declined to comment on the issue.
But sources close to the airline, who don’t want to be identified, say that Brady has been unhappy with the value of his stock options (he holds options worth more than Rs 5 crore) as the share price of Deccan hasn’t appreciated as much as he would have expected (in fact, the share has traded below its IPO price).
Brady could continue and succeed Gopinath as the CEO if he’s able to strike a better deal with the new investors. Airlines may continue to loose money for a year or two. But when the dust settles down on the Indian skies, the poster boy of Indian aviation may not be there at the helm of Deccan to reap the benefits.