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Qatar Airways may invest in SpiceJet

LiveMint logoLiveMint 22-05-2014 PTI

West Asian airline Qatar Airways is likely to invest in India’s second largest low fare airline by passengers carried SpiceJet Ltd by purchasing its parking slots overseas, the Press Trust of India reported on Thursday.

The news agency said the state-run Qatar Investment Promotion Authority are likely to meet the top brass of SpiceJet shortly, citing unnamed sources.

“A team of officials from Qatar Investment Promotion Authority is scheduled to meet the SpiceJet management in a day or two to discuss investment plans of Qatar Airlines,” PTI reported.

Qatar Airways and SpiceJet did not offer any comments to Mint for the story.

On Tuesday, SpiceJet said the company is “in very advanced stages of a capital infusion discussion with an external entity” adding that when completed will help the airline to clean up arrears and rebuild with confidence.

An equity infusion is critical for SpiceJet as losses mount.

Last week, SpiceJet posted a record net loss of Rs.1,003.24 crore for the fiscal year ended March 2014. The loss widened five times from Rs.191.07 crore a year ago, as a weak rupee and rising costs took their toll.

The airline, controlled by media baron Kalanithi Maran, lost an average of Rs.2.75 crore every day that it flew in the country with a domestic market share of nearly 20%.

“The year ended 31 March 2014 was perhaps the most challenging period in Indian aviation history,” SpiceJet said in a statement on Saturday.

“The sharp depreciation of the Indian rupee during the quarter ended 30 September 2013 was unprecedented. Given the fact that over 75% of any Indian airline’s cost is influenced by the dollar, the effects of the exchange rates on a broad spectrum of cost heads were crippling.”

This was aggravated by slower economic growth and a softening demand in a market, where capacity continued to be added by the industry. In the quarter ended March, its loss widened to Rs.322 crore from Rs.186 crore a year ago, it said.

In August 2013, SpiceJet started fresh talks with private equity funds, an Oman-based sovereign wealth fund and foreign airlines from West Asia, as well as an Indian conglomerate, for selling a minority stake to fund expansion plans.

SpiceJet has been seen as a potential target by foreign airlines after rules were eased in 2012 to allow foreign carriers to buy up to 49% in local airlines. All but market leader IndiGo in India’s six-player airlines industry are losing money, hit by high fuel prices and below-cost sales in a highly competitive aviation market.

SpiceJet in Tuesday’s statement also said that it would be “going after cost optimization on a war footing now”, without giving details.

According to the website, the Qatar Investment Promotion Authority is a state-run investment body.

On 5 May, another news agency Reuters reported that Qatar Airways is interested in buying a stake in budget airline IndiGo, citing chief executive officer Akbar Al Baker, without disclosing further details.

IndiGo, run by InterGlobe Aviation Ltd, is India’s largest airline with a market share of 30.9% on March as well as the country’s largest low-fare carrier.

Baker denied interest in investing in any Indian airline in an interview

to Mint on 23 April.

“Qatar Airways chief executive says very interested in taking a stake in IndiGo airlines,” Reuters reported.

In May 2013, Qatar Airways’ Baker had said his airline is in talks with IndiGo for a code-sharing agreement with the Indian airline.

IndiGo had then denied any such talk.

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