Spicejet to raise $70 mn through FCCBs

To list its shares on Luxembourg Stock Exchange soon.

Spicejet, the low-cost air carrier, expects to raise $70 million foreign currency convertible bonds (FCCBs) and list its shares on the Luxembourg Stock Exchange by the end of November, 2005.

Addressing a press conference at the launch of its operations in Chennai and Hyderabad, Siddanta Sharma, chief executive officer of Spicejet, said, "The FCCBs are raised to fund its purchase of ten 737-800 Boeing aircraft with 189 seats. The company will have to deposit 15 per cent of the purchase order for which these bonds will be raised." Luxembourg is the right destination for listing as the cost of listing is low and the regulatory time taken is less.

The delivery of aircraft will start from February 2006 and end by December 2007. The company will also lease two aircraft from GE Aircraft Engines, one from Citi and another from IL&FS. These aircraft are expected to come in from March to May next year.

Sharma said that the air carrier would concentrate on developing the existing routes and attracting the corporate clientele. We will encourage the service industry to encourage their middle and junior level officials to use Spicejet so as to cut costs, he said. Spicejet is able to cut fares by 45 per cent as its aircraft has 189 seats compared to conventional air carriers with 150 seats, he added.

About 80 per cent of its tickets are booked through internet and therefore the cost of setting up a distribution network is cut by 10 per cent to just 2 per cent and have extended flying hours by another two hours to 11 hours.

Spicejet operates its services on nine routes"" Delhi, Mumbai, Ahmedabad, Goa, Pune, Bangalore, Kolkata and Jammu and Srinagar.