Deccan board approves merger ratio with Kingfisher

MUMBAI, Jan 31 (Reuters) - India's Deccan Aviation Ltd DECA.BO said on Thursday it would issue three shares for every seven held in Kingfisher Airlines as part of the merger of the latter's airline operations with itself.

The merger will create one of the biggest airlines in the country with a market share of close to a third.

The residual entity of Kingfisher Airlines will retain the ground handling and training business, it said in a statement.

However, the combine is ridden with combined losses of more than 20 billion rupees and has said it may place shares worth up to $300 million with private equity firms over the next two quarters.

Deccan reported a net loss of 1.91 billion rupees on revenues of 5.77 billion rupees in the quarter to December, hit by high fuel costs and cuthroat competition that kept fares low.

Spirits maker UB group holds about 49 percent in Deccan and the combined entity will be called Kingfisher Airlines.

Neither the valuation of Kingfisher Airlines nor the stake that UB Group will hold in Deccan after the share swap was immediately known.

It will operate the two brands -- low cost airline Deccan and full service carrier Kingfisher -- and have a combined fleet size of close 80 planes.

Besides the two brands have ordered more than 170 Airbus (EAD.PA: Quote, Profile, Research) planes including wide-body aircraft for long-haul international routes.