NEW DELHI: Cash-strapped SpiceJet promoter Ajay Singh is in talks with multiple players — including a Middle Eastern carrier and a big Indian conglomerate — for stake sale to raise funds for the struggling-to-survive budget airline which urgently requires recapitalisation to keep flying.
The airline management had been telling government officials concerned about its poor financial health about these talks and has now confirmed the same.
A SpiceJet spokesperson said: “The company continues to be in discussions with various investors to secure sustainable financing and will make appropriate disclosures in accordance with applicable regulations.” Singh has about 60% stake in the budget carrier.
Airlines sources claim Singh is “in active discussion with a Middle Eastern carrier for a possible stake sale which has expressed interest to pick 24% stake and a board seat in SpiceJet. A big Indian business conglomerate has also approached Singh for a stake in the airline.” Comments have been sought from big Middle eastern carriers and the big Indian conglomerate, and are awaited.
The DGCA has allowed SpiceJet to operate half of its approved schedule of flights this summer. An increase in operations will be allowed only if it can prove to the regulator it has “sufficient, technical support and financial resource to safely and efficiently undertake such enhanced capacity.” This will require capital infusion.
SpiceJet is the quintessential and proverbial cat with nine lives. Ajay Singh had started the airline in 2004-05 by tying up with NRI Bhulo Kansagra who had bought erstwhile Modiluft — that flew from 1993 and 1996 — from industrialist SK Modi in 1999-2000. SpiceJet started on Modiluft’s licence.
It has changed hands several times during its existence. Most recently, Singh re-acquired the airline when it was on the verge of shutting down from Kalanithi Maran in 2015. The airline staged a recovery under Singh in the first few years after re-acquisition. But first Covid demat a body blow to all airlines, with financially weak players with no backing from business conglomerates (like Tata Group backing its airlines) were very badly affected.
Just when traffic was picking up post Omicron, Russia’s war on Ukraine pushed up oil prices that made things even tougher.
SpiceJet is yet to give Form 16 to its employees for financial year 2021-22. There is unrest in the airline over continued low salaries while other airlines have begun restoring the same. IndiGo will return to pre-Covid level of salaries for pilots from November 1, 2022.
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