Regional airline Air Costa is in advanced talks with foreign investors to raise ₹350 crore to expand its operations and buy more aircraft.

The airline’s Chief Financial Officer Vivek Choudhary told BusinessLine that the company is willing to offer up to 26 per cent equity in Air Costa. “We will expand our equity base so that the funds are invested in the airline’s operations,” he said.

The Vijayawada-based airline has also applied for a pan-India licence to expand its network and plans to induct six more aircraft by 2016.

The airline has four Embraers as of now, but will return two E170s soon as they are making losses. They will be replaced with two 110-seater E190s, which have been profitable for the airline.

While talks with investors for raising funds are going on, the promoter company LEPL is divesting itself of unrelated ventures such as power and real estate to another entity. This exercise is being carried out so that LEPL, which owns the airline’s licence, can attract investors for the venture.

The airline has also applied to the regulator Director General of Civil Aviation (DGCA) for a pan-India licence, which it expects by November. However, the airline will not fly metro routes but fly between tier II and III cities. It operates 35 flights daily across Ahmedabad, Bengaluru, Coimbatore, Hyderabad, Chennai, Vijayawada, Jaipur, Tirupati and Visakhapatnam. The airline achieved the target of flying one million passengers in 18 months since it began operations.

It has already ordered 50 new E2-190s worth $2.94 billion, which will start arriving from 2018. This is perhaps the biggest order for the Brazilian airline company Embraer, so far.

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