Tatas may fly again, on SpiceJet this time

MUMBAI: The Tatas are re-entering aviation by purchasing a significant minority stake in budget airline SpiceJet. The investment, which the Tatas say is just a financial interest, will be made through an investment arm of the group.

A SpiceJet board meeting scheduled for today is expected to give the necessary approvals to allow the Tatas a foothold in the company.

The deal marks a return to aviation of sorts for the Tatas. The late JRD Tata had pioneered civil aviation in the country when he spawned Tata Airways, which later was rechristened Air-India.

Ratan Tata, in the late nineties, made another effort to get into aviation in alliance with Singapore Airlines. But domestic vested interests scuttled the idea.

SpiceJet CEO Siddhanta Sharma declined to give any details of the deal. “All I can say is that we are being advised by Morgan Stanley to raise additional capital and we are in the process of doing that,” he said. “Beyond this we would not like to comment.”

SpiceJet has been mulling a plan to sell equity to raise $60 million to upgrade technology and improve reservation, customer support and airport facilities. The company was reported earlier to be in talks with Indian and foreign strategic investors for a plain-vanilla equity sale.

According to sources, the Tatas will pick up around 10 per cent in SpiceJet, or a bit lower. SpiceJet shares closed at Rs53.45 on the BSE on Friday. Sources revealed that the investment by Tatas will be priced a little lower than that.