SpiceJet bailout package could be ready by January-end
10 January 2015
A package to bail out India's ailing airline SpiceJet Ltd could be finalised before the end of the month, according to a Reuters report citing two unnamed sources.
SpiceJet, India's second-largest budget carrier, was forced to ground most of its fleet for several days last month as it ran out of cash to pay creditors. Its majority owner, billionaire Kalanithi Maran's Sun Group, said it didn't have the money to keep the airline afloat.
A little later SpiceJet co-founder Ajay Singh said he was working on a financial plan with US-based private equity investors, under which the current owners would sell their stake and fresh capital would be injected into the airline.
Singh and his partners this week handed the government a more detailed plan, and a package could be ready as early as the end of January once due diligence is completed, a senior civil aviation ministry official and a source close to the situation said. Both individuals spoke on the condition of anonymity.
Singh was not available for comment on Friday. SpiceJet declined to comment.
The government is keen to avoid what would be the second collapse of an airline since 2012, following the grounding of Kingfisher Airlines Ltd less than two and a half years ago.
Loss-making SpiceJet, which began life in 2005, employs around 5,000 people and operates 230 flights a day in a market where demand for air travel is rising rapidly but making a profit has proven difficult for most major airlines.
SpiceJet will also start paying money it owes the airport regulator, the aviation ministry official said.
The carrier had been granted several extensions, the latest of which expires on Saturday, while talks with potential investors continue.