SpiceJet rallies over 10% as Ajay Singh takes over ownership

NEW DELHI: SpiceJet Ltd rallied as much as 10 percent and was locked in upper circuit in trade on Friday, after the budget carrier announced its third change of ownership in a decade, with control circling back to original co-promoter Ajay Singh.

This rescue plan may involve changes in the top management and the phasing out of Bombardier aircraft, which would lead to the carrier having only Boeing 737s, executives said.

At 09:50 a.m.; SpiceJet was locked in upper circuit at Rs 20.50, up 10 percent.

SpiceJet's board decided "to transfer the ownership, management and control" to Singh as proposed by principal shareholder and promoter Kalanithi Maran and KAL Airways on Thursday, the airline said in a BSE filing.

The proposal will be submitted for the approval of regulators as well as the ministry of civil aviation, the airline said in the filing without elaborating. SpiceJet revival may take a year.

Former co-promoter Ajay Singh is likely to rope in an unidentified domestic investor and JPMorgan Chase as backers, ET reported. New promoters will infuse Rs 1,500 crore in three installments of Rs 500 crore each, the first starting this month and the last in March, said an official in the aviation ministry, added the report.

Singh may also get Rs700 crore from the current promoters as part of the deal to service debt.

It is likely to be used to fund working capital requirements in initial phase. "Spice-Jet's demise would not have been good for Indian aviation or the economy. It would have led to skyrocketing fares and job losses in the aviation industry," Singh told ET.