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Business News/ Companies / Ajay Singh seeks more time to submit revival plan for SpiceJet
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Ajay Singh seeks more time to submit revival plan for SpiceJet

Singh met aviation secretary V. Somasundaran on Monday to discuss his plan

On Monday, ‘Mint’ reported, citing two unidentified people, that Singh is negotiating with the current owners for a three-phased investment to rescue SpiceJet. Photo: ReutersPremium
On Monday, ‘Mint’ reported, citing two unidentified people, that Singh is negotiating with the current owners for a three-phased investment to rescue SpiceJet. Photo: Reuters

Mumbai: Ajay Singh, a co-founder of SpiceJet Ltd who had sold his stake in the carrier in 2010, on Monday sought more time to craft a concrete investment proposal to help rescue the cash-strapped airline, according to two people close to the development.

Singh met aviation secretary V. Somasundaran on Monday to discuss his plan. Last week, Singh had met aviation minister Ashok Gajapathi Raju and Somasundaran to propose a rescue plan for the airline.

“Singh has sought some more time to submit a revised and concrete proposal for investment to save the airline. At the ministry level, the government does not want any airline to be shut down," said a senior civil aviation ministry official.

“Singh has requested the government to extend the breather given by the ministry to SpiceJet till he finalizes the final proposal," the official said.

He said Singh has not made any commitment on investing any amount when asked about the rumoured 1,400 crore investment figure.

“The investment is a topic that is discussed at company level, not at the ministry level. It looks like Singh is going to partner with some US-based private equity firms," the official added, saying Singh did not elaborate on the details of investors or investment figures.

A person close to Singh confirmed that he met government officials and was working on a revised proposal for SpiceJet.

On Monday, Mint reported, citing two unidentified people, that Singh is negotiating with the current owners for a three-phased investment to rescue SpiceJet.

According to that plan, Singh will buy a significant minority stake in the airline, followed by investments by two foreign private equity (PE) firms. After restoring the company’s financial stability, the PE firms and Singh will seek investments from a foreign airline.

Singh did not reply to text messages and calls seeking a comment.

A spokesperson for SpiceJet, which is now controlled by media baron Kalanithi Maran, declined to comment.

On 5 December, the ministry had, through aviation regulator Directorate General of Civil Aviation (DGCA), asked SpiceJet—which was raising some of its working capital through advance ticket sales—to stop sales of tickets more than a month in advance. That restriction came after the airline cancelled around 1,800 flights in December.

This, along with reports of unpaid salaries, prompted the regulator to act fast to prevent a repeat of what happened with Kingfisher Airlines Ltd, the debt-laden airline that was grounded in 2012.

SpiceJet had to briefly ground its fleet for more than 10 hours as oil companies refused to fuel its aircraft until dues were settled. Amid rumours that the airline was shutting down, the aviation ministry permitted SpiceJet to accept bookings till March-end, asked banks to give short-term working capital loans worth 600 crore and requested state-controlled oil companies to extend a credit line for jet fuel for two more weeks.

The second person cited above said the government was considering an extension of these relief measures if Singh could come up with a concrete proposal to save the airline.

“The main point is that the promoters should not intervene on a daily basis and run the airline. They must select an independent and experienced board and it can oversee the strategic operations," said Nawal Taneja, professor emeritus at Ohio State University in the US, who serves as an adviser to airlines and governments worldwide on Monday.

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Published: 22 Dec 2014, 05:37 PM IST
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