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The new investors in SpiceJet are confident they will get the Ministry of Civil Aviation’s go-ahead for the deal by next week, a source close to the developments said.
The airline’s former promoter, Ajay Singh, is teaming up with JP Morgan to infuse close to $200 million into the cash-strapped airline.
On Thursday, the SpiceJet board decided to transfer ownership, management and control of the airline to Singh as proposed by principal shareholder and promoter Kalanithi Maran and KAL Airways, the airline said in a BSE filing. The BSE filing shows that the promoter and promoter group holding was 53.48 per cent as on September 2014.
The new investors want to be excused from making an open offer for pumping money into the airline, an exemption the Ministry of Civil Aviation can provide.
There are three ways of doing this. The Securities and Exchange Board of India (SEBI) can give it, or it can be given through a court order or by a competent authority in larger ‘public interest’.
Sources said SEBI is unlikely to consider exemption. Instead, the Civil Aviation Ministry, which is the competent authority, may consider granting exemption as the case is directly related to the larger public interest.
The exemption is required as the foreign investment holding is likely to exceed 25 per cent; this triggers an open offer. “The need is to ensure that the airline is brought back into proper financial health. If there is an open offer now it will destroy the airline,” sources said.
Singh spent most of Friday at the Ministry but declined to speak to newspersons.
Sources indicated that the new investors will pump ₹1,500 crore into the cash-strapped airline in three equal instalments till March.
While there has been talk of rationalising SpiceJet’s manpower and fleet, a person close to the development said no decision has been taken on returning the Bombardier Q-400 aircraft. SpiceJet is the only low-cost airline in the country to operate two kinds of aircraft; this is cited as a reason for its losses. Industry watchers say two kinds of aircraft mean different sets of crew and spares are required, adding to the operating cost.
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