Case Study

Air Deccan (B): Kingfisher and the king of good times

5 pages
August 2008
Reference: IMD-3-1977

On 31 May 2007, after a week of intense negotiations, the board of Deccan Aviation Ltd approved the acquisition of 26% of its equity by Kingfisher Airlines’ parent company, United Breweries (UB) Holdings Ltd at a price representing approximately a 10% premium to the prevailing market price of Deccan Aviation Ltd. UB Group also got the option to bid for another 20% of the company at a later stage at the same price of Rs 155 per share, in compliance with SEBI regulations. UB Group became the largest shareholder in Deccan Aviation Ltd, entitled to nominate three directors on the board. On the 12-strong board, 3 members were also nominated by the original promoters and institutional shareholders and the remaining 6 were independent directors nominated jointly by the other two groups. Captain G.R. Gopinath continued to serve as executive chairman, but a new CEO was appointed, reporting directly to the board of directors. Commenting upon this ground-breaking transaction, Capt. Gopinath said: “Initially, when Dr. Vijay Mallya (UB Group owner) publicly said that he was interested in Air Deccan, I did not take it seriously. I thought he wanted to buy the whole airline, and we were not for sale. However, when all the available synergies between Kingfisher and Air Deccan were examined more closely, it became clear that coming together would make enormous financial and operational sense. Besides, UB were happy with a lower shareholding which I originally perceived to be a minimum of 51%. With UB now set to become the largest single shareholder, they have demonstrated their commitment to exploiting the enormous synergies that exist between Kingfisher and Air Deccan. The two airlines will operate as a group whilst maintaining their individual identities for the near future. I think that Dr. Mallya and myself can do wonderful things together and build huge shareholder value with our respective teams”.

Learning Objective

Learn about new business models, innovations, growth management, low cost carrier strategies, Indian issues.

Growth Management, Airline
Published Sources
© 2008
Available Languages
Related material
Teaching note
Case clearing houses
IMD case studies are distributed through case clearing houses. In order to browse the collection and purchase copies please visit the links below.

The Case Centre

Cranfield University

Wharley End Beds MK43 0JR, UK
Tel +44 (0)1234 750903
Email [email protected]

Harvard Business School Publishing

60 Harvard Way, Boston MA 02163, USA
Tel (800) 545-7685 Tel (617)-783-7600
Fax (617) 783-7666
Email [email protected]

Asia Pacific Case Center

NUCB Business School

1-3-1 Nishiki Naka
Nagoya Aichi, Japan 460-0003
Tel +81 52 20 38 111
Email [email protected]


Research Information & Knowledge Hub for additional information on IMD publications

Discover our latest research
IMD's faculty and research teams publish articles, case studies, books and reports on a wide range of topics