SpiceJet open to equity dilution to foreign airlines

Mumbai: Delhi-based low-cost carrier, SpiceJet, is open to the idea of equity dilution to foreign airlines, if the overseas carriers are allowed to pick up stake in the company. Late on Wednesday night, the airline’s chief executive Sanjay Aggarwal told ET, “If any foreign airline comes on board as a strategic partner, we will certainly welcome them. They should, however, allow SpiceJet to expand its footprint and add synergy to our network.”
Talks have been doing the rounds that some shareholders want to exit SpiceJet, according to a person familiar with the development. There is, however, no clarity on when the government may permit foreign airlines to acquire equity in their Indian counterparts. The Centre is reportedly planning a policy change to allow foreign airlines to invest in domestic carriers with a cap of just below 26% first and then increase it to 49%.
Mr Aggarwal clarified that his company has enough cash and was yet to fully utilise the funds from Wilbur Ross, who had invested $80 million in SpiceJet. “There is a possibility of consolidation in the Indian airline industry over the next fiscal, and will look at buying opportunities too,” Mr Aggarwal said.
However, analysts have a different point of view. They point out that $80 million is a small amount to run any airline for more than six months in the current environment. SpiceJet has posted a net loss of about Rs 18 crore in the October-December quarter. Moreover, airlines have dues payable to oil marketing companies and airport authorities.
19/02/09 Mithun Roy/Economic Times

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Categories: SpiceJet Feb 2009