SpiceJet likely to get Rs 1,200 cr lifeline

Kalanithi Maran-led low-cost carrier SpiceJet is in talks with overseas investors for a capital infusion of around Rs 1,200 crore which it desperately needs to clean up its books.

The airline last week reported a huge loss of Rs 1,003 crore for the 2013- 14 fiscal.

"We are in advance stages of a capital infusion discussion with an external entity.

When completed it will help us clean up our arrears and rebuild with confidence," the airline said in a statement.

According to a recent report by Sydney-based aviation think- tank, Centre for Asia Pacific Aviation (CAPA), SpiceJet requires at least Rs 1,200 crore to remain in the skies.

Earlier, the carrier was in talks with a leading Singapore-based budget carrier Tigerair and Kuwait Airways for FDI investments, which did not materialise. However, Spice- Jet and Tigerair have signed a three- year inter- line agreement to connect Singapore from the Hyderabad airport.

SpiceJet shares rose over 3 per cent on talks about fund infusion and ended the day 3.32 per cent higher at Rs 17.10 on the Bombay Stock Exchange (BSE). During the day, the scrip gained 5.43 per cent to Rs 17.45. In terms of volume, 102.72 lakh shares of the company changed hands on the BSE during the day.

US investor Wilbur Ross known for restructuring failed companies was the single largest stakeholder in SpiceJet before Maran took over the airline in June 2010.

Ross had made an $ 80 million strategic investment in 2008 in the airline and sold his 30 per cent stake for $127 million to Maran.

Since the beginning of the year, the airline has gone in for cut- throat competition with other Indian carriers by offering rock bottom fares that have forced market leaders like IndiGo, Jet Airways and Air India to match the offer in a desperate bid to retain their share of the market pie.

On February 24, SpiceJet announced a bonanza for air travelers, slashing fares by a hefty 35 per cent to 75 per cent in a three- day sale of tickets for the summer holiday season.  

Courtesy: Mail Today