Regional Round-Up
SpiceJet seeks funding lifeline
June 1st 2014
Chennai-based Indian budget carrier, SpiceJet, has reported a loss of US$167.1 million for its fiscal year to March 31, 2014, the airline’s third consecutive year of red ink. The results heightened speculation in India that the privately-owned carrier could be headed down the same road as fellow Indian airline, the failed Kingfisher Airlines. Read More »
News in late May that Spicejet, which is the fourth biggest airline in India, was “in advanced talks” for additional funds with lenders and/or investors added to the perception the airline was in serious financial trouble.
“This year, ended March 31, was perhaps the most challenging period in Indian aviation history,” the airline said in a statement to the stock exchange.
“The sharp depreciation of the Indian rupee during the quarter ended September 30 2013 was unprecedented. Given the fact that that more than 75% of any Indian airline’s cost is influenced by the US$, the effects of the exchange rates on a broad spectrum of cost heads were crippling”, it said.
SpiceJet is controlled by the Sun Group, which is owned by Indian tycoon, Kalanithi Maran. With the airline’s finances in such vulnerable shape, especially as another competitor, AirAsia India, is about to take off, one solution for survival would be to take a foreign partner onboard as has happened with Etihad Airways and Jet Airways.
In 2012, after much procrastination and protests from protectionist aviation operators, the Indian aviation authorities agreed that foreign carriers could buy up to 49% of an Indian airline.
