Kalanithi Maran to buy fledgling airline

Billionaire media baron Kalanithi Maran is close to sealing a deal to acquire Star

Aviation for over Rs 1,000 crore, launching himself into a struggling industry by buying an airline that is yet to start operations.

Mr Maran, who runs the Sun Network with interests in television, radio and newspapers, is buying the regional carrier in his personal capacity, persons close to the development said. Other terms of the deal and how it will be funded are not known.

Top executives of Star Aviation and Sun Network maintained that no such deal has been finalised. Mr Maran, the son of late Union minister Murasoli Maran and the grand nephew of Tamil Nadu chief minister M Karunanidhi, could not be reached. The 43-year-old is ranked 601 in the Forbes’ list of billionaires, with a net worth of $1.2 billion.

Star Aviation is owned by a Dubai-based NRI, Syed Mohammad, who owns a business empire estimated to be worth $3.8 billion, including an aircraft leasing company. Star Aviation’s imminent sale comes in the backdrop of its delayed launch because of a challenging economic environment. The airline industry has been especially hard hit and trade group IATA estimates that Indian carriers will post a combined loss of $1.5 billion (Rs 7,500 crore) in 2009.

Star Aviation, which was scheduled to launch its services early this year, now plans to do so in January or February 2010, a company official said on condition of anonymity. The airline has placed orders for seven E170 aircraft from Brazil’s and two have been delivered so far, he added.

Kapil Kaul of the Centre for Asia Pacific Aviation said that if the deal materialises, it is “very good news for Star Aviation’s promoters.”

“The Maran family have access to huge resources and sustaining power; they can bring capital to fully fund the project. But most important is having a professional management as well the choice of aircraft,” he observed.

Star Aviation, the first carrier to get an approval to operate a regional airline in the southern part of the country, has asked the government for time up to June 2010 to launch its services after missing a previous deadline. “As the first airline, Star will have the first mover advantage and it could also benefit of operating from the less crowded airports in the South. The entry of regional carriers will also enhance connectivity to the underserved Tier II and Tier III cities,” said an aviation analyst on condition of anonymity.

Sun Network, which owns the Sun TV channel, Suryan FM radio stations and the Dinakaran daily, has a licence as non-scheduled airline operator for chartered flights and air taxi services under the name Global Express. Two years ago, the company won shareholder approval to operate commercial flights.

It is also learnt that a company by the name “Sun Aviation” has been incorporated with the Registrar of Companies in Chennai, with Mr Maran as the founder.

ET had reported in August that Star Aviation and Sun Network were in talks for 50:50 joint venture, but both companies denied the development. In recent weeks, Star Aviation has again been in the news, with Mr Maran and Paramount Airways seen as the likely buyers.