New Delhi, May 20: Kalanithi Maran-led SpiceJet today said it was in advanced talks with an overseas investor for funding.
The announcement comes days after the country’s second-largest low-cost carrier reported its biggest annual loss. The company, however, is keeping the name of the investor under wraps till it manages to seal the deal.
“We are in very advanced stages of a capital infusion discussion with an external entity that when completed will help us clean up our arrears and rebuild with confidence,” the airline said in a statement.
SpiceJet has been seeking FDI since the government allowed foreign airlines to pick up stakes of up to 49 per cent in local carriers in September 2012.
In the last two years, there have been reports of SpiceJet being in talks with airlines such as Emirates and Qatar Airways for FDI deals but nothing materialised.
In December, SpiceJet signed a three-year agreement with Singapore’s largest budget carrier Tigerair to facilitate overseas travel for its passengers, fuelling rumours that Tigerair may pick up a stake in the Chennai-based airline.
According to a recent report by aviation think-tank Centre for Asia Pacific Aviation, SpiceJet requires at least Rs 1,200 crore to stay afloat. The airline suffered its biggest loss of Rs 1,003.24 crore for the financial year ended March against a loss of Rs 191.07 crore a year ago. For the quarter ended March, net loss stood at Rs 321.51 crore because of the depreciation in the local currency, economic slowdown and a moderation in demand. According to SpiceJet officials, the carrier suffered a loss of Rs 2.75 crore on a daily basis.
“The sharp depreciation of the rupee during the quarter ended September 2013 was unprecedented. Given the fact that over 75 per cent of any Indian airline’s cost is influenced by the dollar, the effects of the exchange rates on a broad spectrum of cost heads were crippling,” the airline said.
SpiceJet had the noted US investor Wilbur Ross as the single largest stakeholder before Maran took over the airline in June 2010. Ross had made an investment of $80 million in 2008 and sold his 30 per cent stake for $127 million to Maran.
The shares of SpiceJet today rose over 3 per cent to end 3.32 per cent higher at Rs 17.10 on the BSE. During the day, the scrip gained 5.43 per cent to Rs 17.45. In terms of volume, 102.72 lakh shares of the company changed hands on the BSE during the day.