Regional carrier Flyeasy buys 74% of grounded airline Air Pegasus

Bengaluru-based regional airline Flyeasy has picked up a 74% stake in its peer, grounded carrier Air Pegasus, in the first sign of consolidation in the regional space.

Air Pegasus’ founder Shyson Thomas will hold the rest.

Air Pegasus in a press release said this will help the carrier to restart operations from March 1.

“The first phase investment is Rs 26 crore out of which Rs 13 crore will be for capital and Rs 14 crore for restructuring the airline’s debts. The second phase will be to the tune of Rs 60 crore for expansion. That will be a combination of equity and debt,” Rajesh Ebrahim, group CEO of the airline told ET.

Cash-strapped Air Pegasus was forced to cancel flights indefinitely since July 27 after two of its three leased ATR aircraft have were reposessed by Dublin-based lessor Elix Aviation for non-payment of rentals.

Thomas had since been unsuccessfully trying to raise funds to revive the airline. Parvez Damania, owner of the short-lived premium carrier Damania Airways had visited Air Pegasus’ office, but the talks didn’t progress. Thomas had then claimed the airline was in final round of talks to sell 30% stake to a Singapore-based private equity investor.

Flyeasy was in talks with Sharjah-based Air Arabia to sell a majority stake. That too hasn’t happened.

“Air Arabia deal is suspended since both sides couldn’t reach synergies. We have signed with another large airline from the middle east,” said Ebrahim. He didn’t disclose the name but said the letter of intent has been signed.

As part of revamping the operation, Air Pegasus will induct 24 aircraft in the next four years out of which 6 will be inducted this year, it said in the press release.

Ebrahim said Flyeasy has applied to the aviation ministry for a pan India license.

“Air Pegasus will continue as a regional airline operating in tier 2 and tier 3 cities while Flyeasy airlines will operate as a pan India operator with an all Airbus fleet and will have a commercial launch on May 2017”, Air Pegasus said in the release.