SpiceJet gains 7%, then pares some gains; here's why

NEW DELHI: Shares of SpiceJet jumped 7.12 per cent in intraday trade on Friday on reports that the domestic airline is in talks with Gulf carrier Qatar Airways to negotiate a commercial deal that could eventually lead to the company picking up a stake in the Indian airline.

The company, however, denied the reports during late trading hours. The stock ended the day at Rs 23.90, up 3.24%, on the BSE.

The negotiations will initially involve SpiceJet signing an interline agreement with Qatar Airways, making Doha its international hub and funneling passengers originating from India through to the Gulf carrier. Qatar Airways has been looking to expand its presence in India as it lags behind Emirates and Etihad.

SpiceJet is keen to use the Qatari capital Doha as an intermediate point to expand into regions where it cannot fly nonstop with its Boeing 737s, said one of the persons.

“Talks were held recently and consensus was achieved on an interline arrangement,” said a SpiceJet executive who did not want to be identified. “It was decided to resume discussions after the Eid holidays and talks will resume again in a week’s time.”

A stake purchase could lead to SpiceJet, emerging from a crisis stemming from a cash crunch, getting easy access to slots at Doha’s Hamad International Airport, said one of the persons. That will be a big boost for the Ajay Singh-promoted airline after its recent close call.

“Places such as Istanbul, Cairo, Amman, Najaf, Erbil and others are of key interest to the airline where a stop in Doha would ensure seamless transfer of passengers from various points in India to the aforementioned destinations via Doha,” said the person.

Talks between Qatar Airways and SpiceJet first took place in March and a second meeting happened recently.

If a deal does take place, it will be the second such transaction in recent years after Etihad Airways picked up a 24% stake in Jet Airways in 2013.

(With inputs from Bureau)