The Kalanathi Maran-controlled SpiceJet is in advanced talks with AirAsia, the Malaysian low-cost carrier, for a stake sale, said top officials in the ministry of civil aviation.
If it happens, this would enable SpiceJet to get funds for acquiring new planes and expanding its network. And, it would give AirAsia an Indian footprint and expand its operations in the subcontinent.
However, AirAsia's group chief executive, Tony Fernandes, said: "AirAsia rejects the speculation surrounding our possible expansion in India. These reports are completely incorrect. AirAsia has not filed a bid for the Indian budget carrier and has no intention of doing so."
In an email, a SpiceJet spokesperson said: "A few foreign airlines/investors have evinced interest in SpiceJet. It will be very premature to comment on the possibilities of any fresh equity issuance to such interested parties."
The Marans hold 48.59 per cent stake in the airline.
Last week, the airline board approved a plan to issue convertible debentures of about Rs 200 crore (Rs 2 billion) to the promoters, increasing their stake to 53.59 per cent upon conversion.
The airline has market capitalisation of Rs 2,150 crore (Rs 21.5 billion).
The stock rose 13 per cent to close at Rs 44.40 at Tuesday's trading close.
"We certainly need funds for fleet expansion and whenever there is an attractive opportunity (for partial stake sale), we will definitely look at it but there is nothing on the cards as of now," S L Narayanan, chief financial officer of Maran's Sun group, had said last week.
The airline is looking for private equity investment, too, and there were reports about investment by Bravia Capital.
SpiceJet has 50 planes, comprising Boeing 737s and 12 Bombardier Q400 turboprops.
It will be acquiring three turboprops in the next few months and has an option to take 15 more.
It is also negotiating with Boeing and Airbus to acquire new-engine narrow-body planes such as the Airbus A320neo or Boeing 737Max.
SpiceJet is also expanding its international network and announced new flights to Male and Dubai today. Its market share is a little above 19 per cent, making it the fourth largest domestic airline.