New Delhi: Neil Mills has resigned from his post as chief executive officer (CEO) of SpiceJet Ltd a year-and-a-half before his contract ends as the airline plans to raise funds to cope with increased competition in the domestic market.
“He has put in his papers,” said a person familiar with the matter who asked not to be identified. This person added that other exits were expected.
The resignation took place sometime in the last few days. It’s not clear if it happened during Mills’ visit last week to Chennai, where airline promoter Kalanithi Maran is based.
A SpiceJet spokeswoman did not respond to an email and text messages seeking comment.
A second person familiar with the matter confirmed Mills’ resignation and added that he could be joining another Asian airline, perhaps within a month’s time.
This means the airline could be without a CEO and a chief commercial officer (CCO), two of the top three positions in an airline, for some time.
Mills is the second major exit from the airline in the past few weeks. SpiceJet’s chief commercial officer Harish Moideen Kutty resigned weeks earlier, a little over a year after he joined the budget airline. Kutty has joined RAK Airways.
Kutty’s resignation came days after the airline announced a bigger-than-expected loss of Rs.191 crore for the fiscal year ended March. He was the second chief commercial officer to quit SpiceJet in 18 months.
Mills has been with the airline since 2010 and was hired by Maran from FlyDubai. Maran, who owns the profitable Sun TV network that runs several channels and FM stations and also a direct-to-home (DTH) broadcast company, bought the airline from NRI promoter Bhulo Kansagra.
The airline has, however, been losing money. The Marans have pumped Rs.350 crore into SpiceJet in the last three years; in two, the airline has lost Rs.796 crore.
In 2009-10 and 2010-11, the airline posted its first profit. By 2011-12 and 2012-13, though, it was back to its loss making ways—Rs.606 crore in the first year and Rs.191 crore in the second.
SpiceJet is expected to announce its results for the first quarter in the coming fortnight as it copes with the additional challenge of a weaker rupee. Nearly 70% of the cost incurred by low-cost airlines such as SpiceJet is dollar-denominated.
“The rupee’s devaluation is a huge problem impacting costs from fuel to insurance, from leasing to spare parts and so on,” said former Jet Airways (India) Ltd CEO Steve Forte, warning that the months ahead will be difficult for airlines in India. “Not much in the industry moves without the dollar. Profits will decrease and losses increase. It is one of the worst things that can happen to the industry.”
In a 16 June interview, Mills had fielded several questions related to the airline’s performance and had not ruled out moving on.
“Who knows what will happen? Mine is a five-year contract till 2015,” he had said in reply to a question on whether he planned to complete his term.
The resignation comes as the government allowed foreign airlines to invest in Indian ones in September last year. Consulting firm Centre for Aviation, or CAPA, said in a July report that at least three Indian carriers including Jet Airways—could be potential investment targets and see an infusion of $1.3 billion in equity.
Jet’s expat CEO Nikos Kardassis resigned at the end of a five-year stint last month after the company announced investments from Etihad Airways PJSC that are yet to be cleared. Etihad is expected to have a significant say in who the next chief executive officer will be.
An analyst said the absence of a CEO and CCO could hurt SpiceJet in what is typically a lean quarter for low-cost airlines.
“When you bring in a CEO with much hype and your losses are double the sum pumped in to prop up the airline, any promoter is likely to lose patience. SpiceJet started off well and drifted off due to poor management. The change of guard didn’t help,” said Mohan Ranganathan, aviation analyst and member of a government-appointed safety council.
SpiceJet, which started operations, in 2005, a year before market leader IndiGo, has a market share of about 20% as opposed to the rival carrier’s 30%. SpiceJet has 56 planes, about a dozen less than IndiGo’s 67.
“Wrong priorities took it on a downslide. SpiceJet could have cashed in with the use of Q400 to challenge IndiGo. Did they chose the wrong aircraft and pay the price?” Ranganathan said, referring to a smaller aircraft type that the carrier added to what was an all-Boeing 737 fleet.