SpiceJet in talks with overseas investors for capital infusion

Written by fe Bureau | Chennai/Mumbai | Updated: May 21 2014, 10:23am hrs
Kalanithi Maran-promoted low-fare airline SpiceJet, which has plunged deep into red, is likely to get the much-required capital infusion soon. The airline, often in headlines for being in talks with a slew of overseas players for diluting its stake post opening up of FDI in aviation, has now inched closer to get investment into the loss-making entity.

A spokesperson, while confirming the development, told FE in an e-mailed response: We are in a 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.

Refusing to divulge further details about the proposed deal, the spokesperson said the fact was that the past nine months have been some of the worst for the Indian aviation industry. Economy slowed significantly, demand growth fell sharply, the exchange rate plummeted, raising our costs by about 20%, and load factors fell," the spokesperson said.

SpiceJet had posted a whopping R1003 crore loss in FY14 as against R191 crore in the previous fiscal and the company's total liabilities exceeded its total assets by R1,019 crore.

According to aviation experts, SpiceJet is in need of at least R1,200 crore funds to be able to fly in the skies without difficulties. According to the spokesperson, the airline's restructuring plan in terms of overall revenue and cost strategy is only just starting to take the desired effect. According to a company note, Kalanithi Maran continues to provide the required financial support. During FY14, the promoter had infused around R41 crore.

Meanwhile, in a related development, SpiceJet on Tuesday promoted Kamal Hingorani to SVP and head of customer experience. It also announced joining of Ashwin Noronha as head of ground and airport services.

Kamal Hingorani, currently SVP and head of ground and airport services, is being promoted to the expanded role and position of SVP and head of customer experience. In this role, Hingorani will have the inflight, catering, and customer relations teams reporting to him, and he will also be responsible for customer interface training for ground and airport services (including security) in addition to inflight services department.

Taking on the role of head of ground and airport services is Ashwin Noronha, who will be joining SpiceJet from the consulting and auditing firm KPMG. Ashwin will be responsible for all operational, staffing, training, ground handling, and contractual matters relating to airport, ground services and security.