Regional airline Flyeasy buys 74% stake in grounded carrier Air Pegasus

Flyeasy has acquired 74 per cent stake in grounded carrier Air Pegasus, giving it a fresh lease of life.
 

Promoted by Bengaluru-based ABC Aviation and Training, Flyeasy is awaiting a regulatory nod to start operations. Air Pegasus shut operations last July; its permit was suspended following a cash crunch.

Two of Air Pegasus’s three ATR planes were repossessed by its lessor for payment default.

“We are making an initial investment of Rs 26 crore in Air Pegasus for 74 per cent stake and this will be used to clear dues and resume operations. In the later phase, we will invest Rs 60 crore in the airline,” said Rajesh Ebrahim, managing director, Flyeasy.

A memorandum of understanding has been signed between the two and promoters plan to resume Air Pegasus services with two ATR-72 aircraft from March 1. The airline will induct 24 planes in four years, including six this year.

With the government push to connective in small towns, this is a consolidation in the regional aviation sector.

Ebrahim said his company is pursuing plans to secure permit for Flyeasy, and is in talks with lessors for Airbus A319 aircraft. This means the group will run two airlines, dispelling suggestions that the acquisition has been carried out to secure Air Pegasus permit.

“Our plan is to create a nationwide network, one with ATRs on tier-II and -III routes in the south (Air Pegasus) and with Airbus aircraft for long-thin traffic routes,” he said.

He attributed delays in securing permit for Flyeasy to a change in business plan and switch in choice of aircraft from Embraer to Airbus.

“We do not track Flyeasy and are not aware of their plans. Prima facie, we see challenges in recapitalisation and operationalising Air Pegasus,” said Kapil Kaul, chief executive officer (South Asia) of aviation consultancy CAPA.

Air Pegasus was launched by Shyson Thomas and began operations April 2015, with ATR aircraft. It flew to eight destinations from Bengaluru, but was forced to suspend operations last July following a cash crunch.

Thomas, however, denied that the airline is facing serious financial difficulties and is total liabilities are around Rs 6-8 crore.

Ebrahim will function as the group CEO while Thomas will function as vice-chairperson on the board.