Following Prime Minister Narendra Modi enquiring about the status of the airline at a Cabinet meeting last week, hectic parleys were carried out to arrive at a deal to recapitalise SpiceJet.
After Prime Minister Narendra Modi enquired about the status of the airline last week, hectic parleys were carried out to arrive at a deal to recapitalise the carrier.
Cash-strapped SpiceJet is in talks with two US-based private equity firms for possible investments and a deal in this regard is likely to be sealed through the next six weeks.
A senior official in the ministry of civil aviation said, “The process of due-diligence is underway.
"Because of Christmas holidays, it is taking some time.
"A deal is likely to be finalised in the next six weeks.”
Earlier, PE firms such as Goldman Sachs and Indigo Partners had evinced interest in the Indian aviation market.
Following Prime Minister Narendra Modi enquiring about the status of the airline at a Cabinet meeting last week, hectic parleys were carried out to arrive at a deal to recapitalise the carrier.
Meanwhile, Ajay Singh, a former promoter of the airline, on Monday met senior ministry officials and gave a proposal, detailing measures to revive the carrier.
“They want to restore normalcy of operations and restore the airline’s former scale of operations in the ‘near future’.
This will include getting back aircraft from lessors. To discuss the matter with all departments concerned, a meeting will be held in the next couple of days,” said an official.
Currently, SpiceJet is operating 230 flights a day, against 345 in July.
The airline in learnt to have 17 Boeing 737s in its fleet, against 37 last financial year.
On December 17, it had operated only 75 flights, owing to paucity of funds to purchase fuel. Since then, however, operations have stabilised.
A person in the know told Business Standard, “SpiceJet has raised up to Rs 200 crore (Rs 2 billion) from investors.
"Since the restriction on not accepting bookings beyond 30 days was eased, the airline has started generating Rs 9-10 crore (Rs 90-100 million) a day.
"Expenses stand at around Rs 5 crore (Rs 50 million).
"The resources are sufficient to maintain operations at current levels till the deal is finalised.”
Last week, aviation minister Ashok Gajapathi Raju had hinted at a possible revival, saying SpiceJet was looking at roping in an investor and a deal was expected in a few days.
Ministry sources had said Ajay Singh, former promoter and director of the airline, was expected to provide a plan to the government, adding this might involve a consortium of foreign investors.
Sources say investors are considering pumping in about Rs 1,100 crore (Rs 11 billion), which they believe will get the airline back on track.
SpiceJet has exposure of about Rs 100 crore (Rs 1 billion) to City Union Bank, secured through collateral. It has also tax dues of Rs 100 crore (Rs 1 billion).
The fund infusion by investors could be accompanied by operational changes such as paring of Bombardier operations (to help it return to a single-plane configuration) and doing away with some sectors.
Sources in the ministry say the airline has paid up to Rs 13 crore (Rs 130 million) of dues to oil companies (Rs 1 crore or Rs 10 million of dues are pending).
Now, it is buying fuel on a cash-and-carry mode, they add.
On Wednesday, it spent Rs 3 crore (Rs 30 million) on fuel and about Rs 5 crore (Rs 50 million) on Thursday, sources said.
SpiceJet told ministry officials it had opted for a cash-and-carry mode, as oil companies offered a discount of 13-16 per cent through this route.
Now, however, it is willing to pay higher costs, provided oil companies offered a 30-day credit line, as was the case with other airlines.
The airline has assured the Airports Authority of India that it will give a bank guarantee of Rs 120 crore (Rs 1.2 billion) soon.
SpiceJet has dues of Rs 200 crore or Rs 2 billion (as of December 5) with Airports Authority of India.
Earlier, it had given a bank guarantee of Rs 82.5 crore (Rs 825 million).