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SpiceJet plans Rs 400-cr FCCB issue to acquire 20 Boeing — No change in ownership structure: Chairman

Ashwini Phadnis

During the first three months of operations, the airline has been recording profits as it has been able to "fully recover" its variable costs.

Goa , Aug 22

PUTTING to rest speculation that the promoters were planning to exit the sector, Mr Siddhanta Sharma, Chairman of SpiceJet, the low-cost airline, has said that there is no such move.

"There has been no talk with anybody including the Hindujas. May be they (Hindujas) are expressing their personal interest. But nobody has approached us and the company has no information. There is no due diligence or anything like that happening. We are also not looking at coming up with a public offer as we are already a listed company," he added.

In the recent past there has been intense speculation that there may be some changes in the ownership structure of SpiceJet, with several suitors said to be interested in the airline. "People are probably interested in us as we have done very well," Mr Sharma added.

During the first three months of operations, the airline has been recording profits as it has been able to "fully recover" its variable costs such as the amount spent on leasing aircraft, uplift of aviation turbine fuel (ATF), and landing and parking charges.

However, there is a deficit on account of fixed overhead costs such as administrative cost, Mr Sharma said. "We expect to break even during the second quarter of operations and be profitable in the first year itself."

Meanwhile, the airline plans to raise close to Rs 400 crore ($90 million) through a foreign currency convertible bond (FCCB) issue to fund its planned acquisition of 20 next-generation Boeing 737-800 aircraft.

"We hope to close the FCCB issue by September this year. The funds will be principally utilised to fund the airlines plans to acquire 20 Boeing aircraft that we have committed to," Mr Sharma said.

The airline hopes to take delivery of the first of the aircraft next January, and plans to add one aircraft a month between August next year and December 2007.

The induction of the aircraft will also see the airline expand its route network and increase the number of flights operated. "We plan to start a daily flight from Delhi to Chennai and Kolkata from November this year. We hope to more than double the number of daily flights operated from the current level of 20 to 45 by the end of the year," Mr Sharma said. The airline's plans include operating flights to Hyderabad, Patna, and Srinagar in the near future.

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