Ajay Singh draws up 5-yr Spicejet plan; to bring foreign investors

New Delhi: Ready with a five-year plan to revive the fortunes of SpiceJet, its original founder and new owner Ajay Singh is talking to multiple foreign investors for fund infusion into the budget carrier.

Singh, to whom current promoters Maran family has agreed to transfer 'ownership, management and control' in the airline, said necessary downsizing will also be undertaken as part of the restructuring plan, but it would be kept at minimum.

Can Ajay Singh revive SpiceJet? 

At the end of July-September quarter of 2014, for which the latest shareholding pattern is available, Marans held 53.48 per cent stake in Spicejet. Thereafter, their stake rose further to 58.46 per cent pursuant to conversion of warrants. As part of the deal, Marans would transfer entire equity stake in the airline to Singh and would cease to be promoters, but would remain invested through warrants lying with them, which would result in 10 per cent stake upon conversion.

While Singh did not disclose the names of the foreign investors he was talking to, sources said that they could include US-based JPMorgan.

"The airline has given a revival and restructuring plan to the Civil Aviation Ministry for change in control, which has to be cleared by it. Once they (the Ministry) do it, we will execute the revival plan," Singh told PTI.

Yesterday, the SpiceJet board approved the 'Scheme of Reconstruction and Revival' that would see Kalanithi Maran and Kal Airways transferring ownership along with ceding management and control of the ailing airline to Singh.

Singh said the revival plan would focus on strengthening finances and operational efficiency, among others. He has also drawn up a five-year plan to rejuvenate the low-cost carrier, which may include phasing out of the Bombardier Q400 fleet.

The original founder has re-boarded SpiceJet amid the carrier facing financial crunch and even curtailing its operations significantly. In the quarter ended September 30, 2014, SpiceJet reported Rs 310 crore loss, widening from Rs 124 crore in the
previous quarter. The losses were, however, lower in the year-ago quarter ended September 30, 2013 at Rs 560 crore.

For the full last fiscal, the losses were over Rs 1,000 crore, which was its third consecutive year of loss since fiscal 2011-12. Prior to that, it had posted a net profit of Rs 101 crore in 2010-11 and Rs 61 crore in 2009-10.

In response to a query on whether the revival plan also includes some retrenchment, Singh said: "Downsizing has to be done... We will try to keep it at minimum."

SpiceJet has around 5,000 employees. According to sources, the overall the deal size could be worth Rs 1,500 crore in three tranches. On the operational side, Singh said that with 41-42 planes, at present the operations seem to be normal.

Gradually, the number of flights would be increased according to the fleet size, he added. The fresh lease of life marks the third change in ownership for the airline, which was founded in 2005 by Singh along with London-based Kansagra family of Indian origin.

US-based investor Wilbur Ross, known as a turnaround specialist, held a substantial stake for a brief period before selling it to Marans in 2010.

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