There are some dates that become milestones in a company’s history. In the case of SpiceJet, there are two dates: December 16, 2014 and January 13, 2017. Between these two dates, the airline went from rock bottom to becoming India’s second largest low-cost carrier. From a near shut down on 17 December, 2014 to the beginning of a new growth story on 13 January, 2017, when SpiceJet chairman and managing director Ajay Singh announced one of the biggest aircraft deals with Boeing, the world’s leading aircraft manufacturer. The Gurgaon-based carrier, which has nearly 13 per cent market share in the domestic air-travel industry, signed a deal to acquire 205 planes from Boeing, worth $22 billion. It was an emotional day for Singh, who took up the command and control of SpiceJet for a second time 24 months ago when virtually all its flights were grounded — due to large debts and lack of cash — and its erstwhile owners, Kal Airways promoted by the Marans, had decided to shut down operations on 17 December, 2014. “This order is the biggest in SpiceJet’s history. It ends the era of turnaround and marks the beginning of a growth story for the next decade,” he told the whole world as he announced the deal with Boeing. Singh says he is weighing various options for financing the new purchase, including sale and leaseback. However, he rules out raising equity or issuing more debt to pay for the planes.
The new aircraft will increase the range of SpiceJet’s flights by up to one hour. “This will open up more destinations within India and abroad,” says Singh. SpiceJet will take delivery of the first of its new jets in the third quarter of 2018, confirms Dinesh Keskar, senior vice-president of Asia Pacific & India Sales at Boeing.
It is incredible how Singh, the original founder of the airline, returned and rescued the airline from shutting down despite its recent downfall. In June 2010, Kalanithi Maran of Sun TV acquired SpiceJet from Singh, who had co-founded the airline in 2005. But very soon, Maran discovered that the challenges of running an airline were much greater and trickier than other businesses. On 15 January, 2015, the company presented the ‘scheme of reconstruction and revival’ before the Ministry of Civil Aviation which proposed takeover of ownership, management and control by Singh from the previous promoters. This was approved by the Ministry on 22 January, 2015 and was subsequently approved by the Competition Commission of India. Consequently, the entire shareholding of previous promoters constituting 58.46 per cent of the equity share capital of the company was transferred to Singh on 23 February, 2015.
02/02/17 Ashish Sinha/Business World
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The new aircraft will increase the range of SpiceJet’s flights by up to one hour. “This will open up more destinations within India and abroad,” says Singh. SpiceJet will take delivery of the first of its new jets in the third quarter of 2018, confirms Dinesh Keskar, senior vice-president of Asia Pacific & India Sales at Boeing.
It is incredible how Singh, the original founder of the airline, returned and rescued the airline from shutting down despite its recent downfall. In June 2010, Kalanithi Maran of Sun TV acquired SpiceJet from Singh, who had co-founded the airline in 2005. But very soon, Maran discovered that the challenges of running an airline were much greater and trickier than other businesses. On 15 January, 2015, the company presented the ‘scheme of reconstruction and revival’ before the Ministry of Civil Aviation which proposed takeover of ownership, management and control by Singh from the previous promoters. This was approved by the Ministry on 22 January, 2015 and was subsequently approved by the Competition Commission of India. Consequently, the entire shareholding of previous promoters constituting 58.46 per cent of the equity share capital of the company was transferred to Singh on 23 February, 2015.
02/02/17 Ashish Sinha/Business World
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