SpiceJet may turn in profit this fiscal after restructuring efforts

Mumbai: Restructuring exercises initiated by buyout specialist Wilbur Ross in SpiceJet Ltd are beginning to show results, at a time when local carriers are expected to post a combined loss of $2 billion (Rs9,360 crore) in fiscal 2010.
“Yields have already seen more than 20% recovery in the ongoing busy season and are expected to maintain this level over the next year,” analysts Anand Kumar and S. Arun of DSP Merrill Lynch wrote in a 4 December report. “This would enable SpiceJet to break even in FY10, the only listed airline in India not to post a loss for the year.”
Ross injected $80 million in India’s second largest low-fare carrier in July 2008 through his New York-based private equity fund WL Ross and Co. Llc, which invests in and restructures financially-distressed companies. He also brought in 41-year-old Sanjay Agarwal to run the airline, and he in turn hired nearly a dozen senior executives.
Agarwal also brought back G.P. Gupta—who was vice-president, finance, before joining rival GoAirlines (India) Pvt. Ltd as chief financial officer—as SpiceJet’s chief administrative officer.
Ross did not reply to emailed queries but suggested questions be addressed to chief executive Agarwal.
“There was no magic wand or (something that) required radical changes. It was just pure common sense,” Agarwal said. “There was a problem of lack of leadership and cost focus to be addressed. And we simply did it.”
While he declined to comment on SpiceJet’s profitability, Agarwal said the industry would show profits by the next fiscal, considering passenger growth and no capacity addition.
23/12/09 PR Sanjai/Live Mint

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Categories: Foreign Dec 2009, spicejet Dec 2009