The decision to revitalise the airline, which has liabilities of about Rs 1,400 crore and accumulated losses over Rs 3,000 crore, was taken at a Board meeting held on Thursday.
The airline will now seek approval of the revival plan from the Ministry of Civil Aviation. Currently, Kalanithi Maran and his company, KAL Airways, together have 53.48% stake in the carrier. Industry sources said that so-called ‘white knight’ Singh will be chairman of the company, replacing Maran.
It added, “The Board has further directed the Company to take further steps to implement and undertake all necessary steps including to make the appropriate application before the Ministry of Civil Aviation, Government of India for seeking approval of the ‘Scheme of Reconstruction and Revival for the takeover of ownership, management and control of SpiceJet Limited’.”
Ajay Singh, along with UK-based investor Bhupendra Kansagra, had started SpiceJet in 2005 by resurrecting the dormant Air Operators Permit of ModiLuft. He had then sold the airline to Maran in 2010, but retained around 3% stake through various sources.
While SpiceJet’s BSE statement did not mention the quantum of stake sale or investment, industry sources have told Business Standard that Ajay Singh private equity investor JP Morgan are likely to invest about Rs 600 crore in the first tranche for a more than 24% stake, and will later bring in other investors for further growth capital.
With the deal close to being finalised, the civil aviation ministry is also expected to extend the credit time to pay dues to state-run Airports Authority of India (AAI) to at least the end of this month. Of the total liabilities, SpiceJet owes about Rs 200 crore to AAI, Rs 100 to private airports, Rs 700 crore to lessors and the rest to various vendors like catering providers and maintenance services. It is currently making daily payments to oil companies for jet fuel.
The airline is also laying off over 1,000 employees in the next weeks across functions to rein in costs. It has already cut daily flights to 200 from 340 in July 2014, and Boeing 737 aircraft to 17 from 35 in July last year.
The SpiceJet scrip on the BSE closed 3.04% up to Rs 18.65 on Thursday.