SpiceJet co-founder Ajay Singh seeks more time to finalise rescue

SpiceJet co-founder Ajay Singh has asked for more time to finalise a rescue plan for the budget airline, a government official with direct knowledge of the matter said on Monday.

Singh, who helped set up the airline in 2005, was expected to submit a plan on Monday. The official said he has sought two to three weeks to finalise the plan. Singh was not immediately available for comment.

The co-founder is in talks with US-based private equity investors to raise funds and lead a turnaround of SpiceJet, but talks were taking longer time than expected due to the upcoming Christmas holidays, the government official said.

Singh, who holds roughly 5 per cent of SpiceJet, is betting on lower oil prices and an expected acceleration in economic growth to help his turnaround effort for the airline.

SpiceJet, India's second-biggest budget carrier and fourth overall in November, has been struggling for months. Last week it was briefly forced to ground its fleet after suppliers refused to refuel planes.

It has reported five consecutive quarters of losses and owes hundreds of millions of dollars to creditors, including airport operators. A second government official said SpiceJet owed about Rs 14 billion ($221 million) in immediate dues.

The airline's majority owner, billionaire Kalanithi Maran's Sun Group, has said it cannot afford a bail out after sinking $400 million into the airline since buying it in 2010.

Indian carriers, most of whom are loss-making, have struggled with high operating costs, including fuel, and fierce competition that has limited fare increases.

The government hopes its support for SpiceJet will avert an embarrassing collapse just two years after Kingfisher Airlines, which crumbled leaving millions in unpaid debts.

Officials in India's civil aviation ministry are now expected to meet SpiceJet stakeholders within a couple of days to discuss the revival plan.

(Reuters)