SpiceJet to submit rescue plan to govt today

Sources say investors are considering pumping in about Rs 1,100 cr, which they believe will get the airline back on track

Cash-strapped SpiceJet, in talks with two US-based private equity (PE) firms for investment, will provide a revival plan to the ministry of civil aviation on Friday. Ajay Singh, former promoter and director of SpiceJet, along with a consortium of foreign investors, was scheduled to give a proposal in this regard, sources said.

It is understood JPMorgan is an interested party.

A senior ministry official said, “The process of due-diligence is underway. Because of Christmas holidays, it is taking some time. A deal is likely to be finalised in the next six weeks.”

Earlier, PE firms such as Goldman Sachs and Indigo Partners had evinced interest in the Indian aviation market.

Following Prime Minister Narendra Modi enquiring about the status of the airline at a Cabinet meeting last week, hectic parleys were carried out to arrive at a deal to recapitalise the carrier.

On Monday, Singh met senior ministry officials and detailed measures to revive the carrier. “They want to restore normalcy of operations and restore the airline’s former scale of operations in the near future. This will include getting back aircraft from lessors. To discuss the matter with all departments concerned, a meeting will be held in the next couple of days,” said an official.

Currently, SpiceJet is operating 230 flights a day, against 345 in July. The airline in learnt to have 17 Boeing 737s in its fleet, against 37 last financial year. On December 17, it had operated only 75 flights, owing to paucity of funds to purchase fuel. Since then, however, operations have stabilised.

A person in the know told Business Standard, “SpiceJet has raised up to Rs 200 crore from investors. Since the restriction on not accepting bookings beyond 30 days was eased, the airline has started generating Rs 9-10 crore a day. Expenses stand at around Rs 5 crore. The resources are sufficient to maintain operations at current levels till the deal is finalised.”

Last week, Union Aviation Minister Ashok Gajapathi Raju had hinted at a possible revival, saying SpiceJet was looking at roping in an investor and a deal was expected in a few days. Ministry sources had said Ajay Singh, former promoter and director of the airline, was expected to provide a plan to the government, adding this might involve a consortium of foreign investors. Sources say investors are considering pumping in about Rs 1,100 crore, which they believe will get the airline back on track. SpiceJet has exposure of about Rs 100 crore to City Union Bank, which was secured through collateral. It has also tax dues of Rs 100 crore.