US-based private equity firm Texas Pacific Group is the frontrunner for Air Deccan's stake, while Anil Ambani's ADAG is also in the fray. Sources said two more investment houses had evinced interest in picking up stake in the carrier and have started due diligence.
Earlier, Air Deccan had mandated investment banking entity Edelweiss Capital for raising funds for the necessary expansion.
The company has the largest network in the country, covering 65 airports and plying over 350 flights a day. The airline operates with a brand new fleet of 19 Airbus A320 and 24 ATR turboprop aircrafts.
On the Bombay Stock Exchange, the company's scrip closed at Rs 135.20 on Tuesday against the previous day's close of Rs 136.35, registering a marginal decline.
Currently, promoters of the airline, including its managing director Gopinath, hold 22.11 per cent stake. With the private equity infusion, the promoters' holdings are expected to come down according to the percentage of the dilution.
Gopinath said, "We are expanding in big way to become the airline with the largest network in the country and that will require funds. But that does not mean we will hurry for private equity placement. We are in talks with several players and will take a right decision at a right time."
When asked about a possible change in top management post-equity dilution, Gopinath said, "Who runs Air Deccan is irrelevant. I never thought about converting Air Deccan into a family-owned entity. The joy and the challenge in Air Deccan are about creating a great business model for the country, the biggest aviation infrastructure, safe jobs for employees and security for shareholders' money."
"Air Deccan was always looking for a full-fledged CEO to run the airline. Change in management can happen even now, if shareholders wish it so. Though the whole aviation business is going through a turbulence, our investors and management team are confident about a turnaround," he adds.
When contacted, Air Deccan vice-chairman S N Ladhani, who holds over 13 per cent stake in Air Deccan, said he was happy with the airline stake and was willing to acquire more stake.
Industry analysts said that globally airlines took two years to break even, given the competition and fuel cost.
"But new entrant carriers such as Air Deccan, IndiGo and Kingfisher Airlines are expanding aggressively. Therefore, carriers will take more time to make money," they said.
Leading aviation analyst firm Centre for Asia Pacific Aviation estimates that the low-cost-carrier market share in India will reach 70 per cent by 2010, making it one of the world's leading low cost carrier markets in terms of market penetration.
Budget carriers of the country include Air Deccan, SpiceJet, IndiGo and GoAir, while full-service carriers are Indian Airlines, Jet Airways, Kingfisher and Paramount Airways.