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SpiceJet’s new investors, led by founder-promoter Ajay Singh, were currently conducting due-diligence into the operations and books of the low-cost carrier, sources close to the development said on Friday.
The airline had on Thursday announced a revival plan, under which Singh would take management control and ownership by buying out the 58 per cent stake held by current promoter Kalanithi Maran and his associate company, KAL Airways, and investing Rs 1,500 crore in three equal tranches till March.
“The investors have found no financial irregularities so far. The ministry is expected to clear the revival plan next week. The airline is expected to continue with its low-cost business model but will initially operate with a limited fleet to control costs,” the source said.
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Ajay Singh and investors, including private equity player JPMorgan, are also likely to approach the Securities and Exchange Board of India (Sebi) for a waiver from the takeover norms, which mandate investors buying a 24 per cent stake in a listed firm to make an open offer to purchase a further 26 per cent. After Thursday’s announcement, SpiceJet’s shares on the BSE climbed 9.9 per cent to Rs 20.50 apiece on Friday.
Ajay Singh, who started SpiceJet in 2005 and sold it to Maran in 2010, had told Business Standard that he hoped to turn the airline profitable in 2015-16. Singh will look to expand the fleet to 40-42 by summer this year, from the current 32 – 17 Boeing 737s and 15 Q400s. As recently as July last year, the airline had 35 B737s, which it had to halve to reduce costs. Daily flights have dropped to 200 at present from 340 in July.
Singh said stations would also be reduced as part of restructuring, indicating further job cuts were likely, and flash sales would likely continue but be better planned.
On Thursday, the government also allowed SpiceJet to start bookings for flights beyond March 31, though the airline was yet to re-open bookings on its website as of 7 pm on Friday. Forward bookings are critical for SpiceJet to shore up daily revenues. Such bookings, which accounted for Rs 12-13 crore of revenue until November last year, have dropped to Rs 3-4 crore.
SpiceJet, which has total liabilities of Rs 1,400 crore, has also received an extension in credit facility from the Airports Authority of India (AAI) till the end of January. It has dues worth Rs 200 crore to AAI alone, Rs 100 crore to private airports, Rs 700 crore to lessors and the rest to other vendors.
