No more ownership change at SpiceJet, says Maran

Written by Nirbhay Kumar | New Delhi | Updated: Jun 30 2010, 07:46am hrs
Sun TV Network chairman Kalanithi Maran, the new owner of low-cost carrier SpiceJet, has signalled aggressive plans for the airline. In his first interface late last week with SpiceJet employees, Maran said that this is the last time the airline is undergoing a change in ownership, sources told FE.

The current way of functioning at the airline is not going to change. Since we all are now part of a $6-billion business group, we can only hope to grow geometrically, Maran is believed to have told the airlines staff. Maran had come to participate in the ceremony to induct the 21st aircraft into the SpiceJet fleet.

A few weeks back, the media baron announced reaching an agreement with SpiceJet promoters to buy 37.7% stake in the company from its main promoter Bhulo Kansagra and distress asset buyer Wilbur L Ross for about Rs 750 crore. Maran would acquire another 20% stake in the company from the public through an open offer.

In the past, the countrys second-largest low-cost airline had a fragmented ownership, leading to occasional delays in decision-making. With Maran taking the reins, the airline is expected to go for a quick expansion.

Meanwhile, the civil aviation ministry has cleared Marans proposal to induct six new members on the airlines board and change the name of the company to Sun Airways.

Since all the six members have security clearance from home ministry and are already on the board of the Sun Network we had no objection, an official in the ministry said.

SpiceJet has a 13.2% market share in the domestic aviation market. The airline operates 131 flights every day, connecting 19 destinations across the country. After completing five years of domestic operations, SpiceJet is now planning to flag off international flights soon.

As per regulatory guidelines, a domestic airline is eligible to fly overseas only after it completes five years of operation locally and has a minimum fleet of 20 aircraft.

The airline plans to start its overseas operations by July-end. To begin with, SpiceJet is looking to connect Dhaka and Colombo, sources said.

On Tuesday, the SpiceJet scrip declined marginally by 0.35% on the BSE to Rs 57.60 while the benchmark 30-share Sensex fell 1.35%. Maran has made the open offer for 20% more in SpiceJet Rs 57.76, which, if fully subscribed, will take his stake in the airline to 57.73%. The open offer was made by Kal Airways, promoted by Maran and his family. Aviation stocks have given returns of up to 7% after the Spicejet stake sale, reflecting investors increased confidence in the sector which had been treated as an outcast for long. Kingfisher Airlines and Jet Airways have picked up steam on the bourses.

Industry experts forecast that SpiceJet will make a net profit of Rs 250-300 crore in the current financial year. The airline reported a net profit of Rs 61 crore last fiscal. However, Jet and Kingfisher are yet to report a full-year profit after the airline industry started bleeding a few years back.