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SpiceJet raises Rs 300 crore, appoints Ajay Singh as CMD

Will get bluechip investors onboard by June-July, once the valuation improves

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What began as rescue of a beleaguered airline some months back has ended in its complete takeover with the induction of original owner Ajay Singh, his wife Shiwani Singh and Harsha Vardhana Singh on the SpiceJet's board on Thursday.

Simultaneously, Ajay Singh has been appointed as the chairman and managing director without remuneration for the "executive functions to be performed by him."

Additionally, mobilisation of Rs 300 crore through low-cost debt and trade financing was recorded by the board. This is in addition to the Rs 550 crore already pumped in by Singh, who has said the airline needed Rs 1500 crore recapitalisation to emerge out of the current financial crisis where it owes money to creditors including airport operators, oil companies, suppliers, aircraft lessors and others.

A senior executive said three more members, representing Ajay Singh, could be inducted on the board as and when some of the Maran's representatives resign.

He said talks with bluechip investors were on and they could be brought onboard by June or July once the valuation of the budget airline improved.

SpiceJet's share closed at Rs 17.80 on Thursday. Its 52-week high and low were Rs 25.70 and Rs 11.10 respectively. At yesterday's price, the airline's market capitalisation stood at Rs 1067.02 crore.

Sources at the airlines have said Singh, who possessed shrewd business acumen, would not settle for lower valuation and was improving operating performance to bring investors at the right price.

The Gurgaon-based airline has been expanding operations by adding more flights and aircraft. Its current fleet includes 20 Boeing 737-800-NGs and 15 Bombardier Q400. Of this, three wet-leased B737-800-NGs would be returned in June and four of the same aircraft type would be added in the same month and July, taking the total to 21.

An executive said, by October the airline's Boeing fleet will grow to 24 while Q400 would remain at 15, expanding its fleet to 39. This would swell to 45-50 by March, 2016.

"We would be inducting 1-2 aircraft per month (till March, 2016)," he said.
The airline has ordered 40 Boeing 737-800-MAXs whose deliveries are expected to begin from 2017, and it could order more planes. Senior executives have earlier spoken of advancing deliveries of B-737-800-MAX.

An airline analyst, who did not want to be quoted, said the budget airline's operations may have stabilised but it had yet to completely fly out of turbulence. "It (SpiceJet's operations) is stable to some extent compared to what it was in December last year but I wouldn't say it has normalised. Its cash flow has improved and it is paying staff salaries on time but I am not sure whether its vendors are getting paid. It still has a long way to go before it can completely be out of turbulence," he said

Spicejet will be announcing its quarterly result next week.

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