SpiceJet to focus on domestic flights under new Ajay blueprint
23 December 2014
Ajay Singh, who is reportedly close to Prime Minister Narendra Modi, is preparing a fresh blue print to revive the haemorrhaging SpiceJet, according to a Business Today report.
Citing sources, the report said Singh, who retains a 4.5 per cent stake in SpiceJet, aims to bump up his minority shareholding in 'phase 1'.
Having begun with the process of due diligence last Saturday, Singh's team is dealing directly with current owner Kalanithi Maran's team on finances and how to cauterise the bleeding.
Singh's core team reckons that the entire process of diligence, funding and takeover of running the airline is still six weeks away.
Singh, who helped set up the budget carrier in 2005, is in parallel talks with private equity investors for infusion of funds.
Maran had purchased Wilbur Ross' stake among others when he entered the aviation business. But gross mismanagement and the unnecessary haste to acquire customers through rampant low-fare schemes destroyed the financial health of the company, says the report.
The report also said the new architecture will keep SpiceJet a purely domestic operation, without ambition to get into international flights.
With the West shutting down for Christmas and New Year holidays, Singh requires more time to submit his turnaround plan to the aviation ministry.
Already convinced that the airline business has crossed the hump in India, with favourable conditions having set in due to much lower crude prices and outlook, Singh is convinced that a fund infusion of Rs1,200 crore in tranches will revive the beleaguered airline, claims the report.
Singh, an alumnus of the Indian Institution of Management (IIT-Delhi), also has a doctorate from Cornell University. He was officer on special duty to BJP leader Pramod Mahajan during Atal Bihari Vajpayee's government.
His first business venture Argentum Motors, which looked to revive the erstwhile Daewoo Motors' operations in India in conjunction with automobile veteran B V R Subbu, was a failure. But subsequently, Singh joined hands with Bhupendra Kansagra, the London-based non-resident Indian investor in the now defunct ModiLuft.
The new operation, rechristened SpiceJet, was a roaring success. Run on a tight budget, the no-frills carrier actually made profit and at the time of sale to Maran had a cash balance of Rs800 crore.
The New Year should see Singh armed with a plan and a clutch of investors ready to fly back into Indian skies.