SpiceJet plans to buy low-cost carrier

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MUMBAI: Spicejet is looking at acquiring a domestic low-cost carrier (LCC) and diluting minority stake to a foreign carrier, according to its chief executive officer. Talking to ET, SpiceJet CEO Sanjay Aggarwal said: “We would like to buy a low fare domestic carrier, as the company is expected to break even next fiscal. SpiceJet is also open to equity dilution to a foreign strategic player.” Equity dilution to a foreign carrier is aimed at achieving a global footprint, he insisted.
SpiceJet will sell its stake after controlling at least one-fifth of the domestic market. Its share in the domestic market rose sharply from around 9% to 11.8% in three months. “Consolidation is on the cards in the Indian aviation space and one can seal a deal when the going is tough. I am a hunter and will go ahead and do it at the right time,” Mr Aggarwal added.
Analysts are, however, uncertain about the company’s financial strength. SpiceJet incurred a net loss of Rs 18 crore in the October-December quarter and is expected to be breakeven in the June quarter. WL Ross invested $80 million in SpiceJet last year. The foreign company sent its representative Ranjeet Nabha to the SpiceJet board last week and is set to nominate three more directors.
Seven airlines were started in India in the past six years and passenger numbers doubled between 2004 and 2007 as economic growth boosted incomes and drove the demand for air travel. But the sector was hit badly by the rise in aviation turbine fuel (ATF) prices last year and may suffer losses of Rs 10,000 crore in this fiscal

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~ by anand213 on March 3, 2009.

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