SpiceJet: Hectic parelys in Delhi, shares soar as rumour mills work overtime
New Delhi – As SpiceJet awaits the much-needed fund infusion to tide over its financial crunch, there was intense speculation yesterday night that its senior executives and potential investors met top government officials to discuss the future of the carrier.
The talks gained further currency in the wake of SpiceJet shares soaring by a huge 10 percent in the stock market yesterday, after getting a huge battering in the recent past.
While officials in the ministry as also in the airline remained tight-lipped about any meetings, the market was abuzz with talks about discussions held by SpiceJet’s original co-founder Ajay Singh with the Civil Aviation Ministry’s top officials.Besides, there was also speculation that SpiceJet’s Chief Operating Officer Sanjiv Kapoor met top Ministry officials.
When contacted, the officials in the Ministry as well as in the airline refused to comment on any such meetings.
The hectic parleys come at a time when the airline is likely to get the first round of its much-needed capital, as part of an estimated $200 million investment plan.
As per a capital infusion plan received by the Civil Aviation Ministry, the initial funds from an overall corpus of about $200 million may come in by as early as today, sources had said earlier.
“In about a month, more funds would come in,” they added. Another official said the Ministry has received a proposal and the government is hopeful about the carrier’s turnaround.
The airline, which is now operating about 200 flights a day, is also believed to have renewed its bank guarantee to Airports Authority of India (AAI).
Sources said the indications are positive so far and the government does not want one more airline to shut down as that would send wrong signals to the economy and the sector in particular.
Shares of SpiceJet yesterday rose sharply by 10 percent, after a gain of about 3 percent on the BSE on Thursday.
The cash-strapped budget carrier had presented a revival plan to the Civil Aviation Ministry late last month, but it was told to submit a revised comprehensive plan with more details.
SpiceJet’s founding promoter Ajay Singh has also come to the rescue of the crisis-ridden airline, with Singh and a US-based investment fund planning to invest in the carrier.
The potential investors are likely to buy stake from current promoter Kalanithi Maran by infusing $200 million to help the airline to stay afloat.
With the airline grounded for almost one full-day last December due to the oil companies’ refusal to supply it jet fuel without cash, Civil Aviation Ministry had come to its rescue with requests to oil marketing firms and the AAI to extend the credit line to the airline for two weeks till December 31, 2014.