Maran to finalise SpiceJet stake sale this week

A consortium led by Ajay Singh is initially expected to invest Rs 1,200 cr, largely to cover liabilities

Kalanithi Maran, majority owner of low-cost air carrier SpiceJet, could within this week finalise a stake-sale agreement with investors, led by former promoter Ajay Singh, Business Standard has learnt from top civil aviation ministry officials. The move is aimed at shoring up the finances of the cash-strapped airline. The carrier expects to mobilise funds domestically to pay for daily operations this month till foreign funds begin to come by February-March.

“Funding agencies brought in by Ajay Singh, including JPMorgan, are currently carrying out due-diligence. It (SpiceJet) has said it will come to us early this week with a firm revival plan, as we cannot give it indefinite extensions to pay for airport services,” a ministry official said.

Maran, who had bought Ajay Singh’s and UK-based Bhupendra Kansagra’s holdings in SpiceJet in 2010, currently has a 53.48 per cent stake. So far, it is not clear if Maran will completely exit the airline after new investors have come in. A consortium led by Singh is initially expected to invest Rs 1,200 crore, largely to cover liabilities, and then bring in further capital to help the airline grow.

SpiceJet, which has dues of about Rs 1,400 crore, last week renewed bank guarantees worth Rs 15 crore with state-run Airports Authority of India (AAI), to continue operations on credit. To date, it has furnished bank guarantees worth Rs 80 crore with AAI, while its dues stand at about Rs 180 crore. 

“SpiceJet has been making part-payments to airports but these are very small amounts. About 10 days ago, it paid Rs 5 crore to AAI. We are giving it time because our concern is that if an airline closes down, it sends a very bad signal to the industry, and passengers are affected,” said another ministry official, adding the airline would give more bank guarantees when funds were mobilised later this month.

SpiceJet also has dues of Rs 30-40 crore to private airports, besides liabilities to several other vendors. But it is making daily payments to oil marketing companies for aviation turbine fuel supplies. The airline is also under pressure from lessors to return leased aircraft.

SpiceJet, the second-largest airline for a few months in mid-2014, is currently running only about 200 flights a day, against around 340 in July last year. It is operating 17 Boeing 737 aircraft, half of the fleet of 35 it operated in July.