SpiceJet to get fund infusion by mid-Feb, Singh assures lessors

Ajay Singh, set to resume control of the cash-strapped airline SpiceJet Ltd, has held talks with aircraft lessors in Singapore and with SpiceJet pilots to assure them that the airline is likely to get funds potentially by mid-February.

Kalanithi Maran and his co-promoters are in the process of transferring his stake in the airline to Singh, a co-founder of the airline that he exited in 2010. The new deal has been approved by the civil aviation ministry and is now awaiting clearance from the Securities & Exchange Board of India (Sebi).

Meanwhile, lessors to the cash-strapped airline have been getting restless. On 23 January, Reuters quoted Bank of China Aviation's chief executive Robert Martin as saying that SpiceJet was ''a very frustrating situation''.

''Obviously, when we lease planes, we like people to pay us. And if they don't pay us, then generally the way an operating lessor reacts is by moving its planes to somewhere else in the world,'' he added.

On 21 January, The Economic Times reported that lessors wanted to take back 11 planes from SpiceJet.

SpiceJet chief operating officer Sanjiv Kapoor told employees in an email last week that the ''funding will come soon after ownership change is complete, with the first tranche expected in mid-February''.

Singh and fellow investors have promised the aviation ministry an investment of Rs1,500 crore in the airline, following which the ministry has allowed the airline to book tickets beyond March.

An unnamed ministry official told Mint newspaper that lessors have been meeting the Directorate General of Civil Aviation (DGCA) regularly, seeking the return of 11 planes from SpiceJet.

The DGCA has taken legal opinion, and under the Cape Town Convention, to which India is a signatory, the regulator may have to do what the lessors want, this person added.

Consequently, the ministry has asked SpiceJet and Singh to address the concerns of lessors, he said.

Singh has already flown to Singapore where lessors such as Bank of China are based to address the issue, according to Mint.

A SpiceJet spokesperson said the airline is resolving the matter.

(See: SpiceJet bailout package could be ready by January-end)