New Delhi: SpiceJet Ltd’s chief executive officer (CEO) Sanjay Aggarwal has quit, nearly 20 months after moving from the US to take up the assignment, marking the second top-level exit from India’s No. 2 low-fare airline after media baron Kalanithi Maran?acquired?it in June.
Aggarwal handed in his resignation after a board meeting on Wednesday evening, three officials at the airline confirmed on condition of anonymity. The airline’s board member Kishore Gupta is likely to serve as CEO and look after day-to-day operations until a replacement for Aggarwal is hired, one of the officials said.
A SpiceJet spokeswoman confirmed that Aggarwal had quit, but declined to give further details. The firm is likely to make an announcement on his departure to the Bombay Stock Exchange (BSE) on Friday. Aggarwal himself couldn’t be reached for comment.
Maran’s Kal Airways Pvt. Ltd acquired a 38% stake in SpiceJet last month and has made an open offer to buy an additional 20% from shareholders.
Under Aggarwal, SpiceJet turned profitable for the first time in its five years of operations in 2009-10, although this was partly helped by lower fuel prices.
Aggarwal’s exit came two days after the former CEO’s return to work from about a 10-day break in the US.
He joined SpiceJet on 20 October 2008 from US business aviation firm Flight Options Inc. after US-based turnaround specialist Wilbur Ross invested $100 million (Rs467 crore today) in the Indian airline. SpiceJet has since grown from 94 flights daily to 16 cities with 15 Boeing 737 aircraft to 21 Boeing 737 aircraft that fly 137 daily flights to 19 cities.
“It (the exit) came as a surprise, especially since the new board is still to be reconstituted,” said a person close to the development, who did not want to be identified. “He came at a time when nothing was working fine: oil prices were up; there was fragmented ownership, which meant no one could see eye-to-eye in the board; decision-making was a challenge.”
“Now when the company is well capitalized and with a single ownership, there is nothing left to execute. It’s ironical,” the person added.
SpiceJet has sought approval from the civil aviation ministry to induct onto the board Maran, Kavery Kalanithi Maran, M.K. Harinarayanan, J. Ravindran, S. Sridharan and Nicholas Martin Paul, who are already the board members of Kalanithi Maran’s Sun TV Network Ltd.
Maran will be the airline’s new chairman and managing director, as Mint had reported last month. SpiceJet’s senior vice-president (marketing) Anish Srikrishna, who was brought in by Aggarwal, has also quit the firm and Wednesday was his last working day.
“It’s clear that Maran wants to stamp not just his authority, but change the way the airline is run and be seen as the driver behind it—this could well mean that we see the carrier rebranded as part of those efforts,” said Saj Ahmad, a London-based aerospace analyst.
A Mumbai-based analyst said he expects the airline to report a profit in the June quarter. “At a broad level they will have 15-16% Ebitdar (earnings before interest, taxes, depreciation, amortization, and rent) margin (expressed as a proportion of revenue),” said Mahantesh Sabarad, senior analyst at Fortune Equity Brokers (India) Ltd.
Shares of SpiceJet fell on Thursday by 3% to close at Rs56.60 on BSE on a day the exchange’s benchmark Sensex index lost 1.08%.