SpiceJet (SG, Delhi International) has deferred an investment offer from one of the funds managed by US multinational banking and financial services holding company, JP Morgan Chase & Co., India's DNA news has reported.
"They [JP Morgan Chase] are interested in investing but Ajay Singh does not want to bring them on board at the present CMP [Current Market Price]," a senior company executive told dna. "He wants to further improve [the] valuation of the company before getting them (JP Morgan Chase) in."
Singh took formal control of the ailing budget carrier last month when the Indian authorities gave their final approval to his acquisition of Kal Airways Pvt Ltd and Kalanithi Maran's 60.31% stake in the airline. He was expected to team up with JPMorgan Chase and a local investor as part of his investment strategy which which will see a total of INR15 billion (USD243 million) injected into Spicejet to help cover outstanding debts such as leasing dues, wages, and taxes.
"This money has come from a mix of investors and banks. We are getting a lot of funding offers from various players like private equity, debt providers, hybrid products and even foreign airlines," he told the Times of India in an interview last week. "We will choose the mode of investment that comes at the lowest cost. If any further dilution of stake is needed, that will be done at better valuation. Our improved performance will reflect in our stock price."
As such, the carrier is said to require INR4 billion (USD63.57 million) to recapitalize the business. Since taking over, Singh has trimmed the workforce down from 5,500 employees, to 3,900, while moving to expand its dwindling fleet, hit hard by lessors afraid the airline may be another Kingfisher Airlines (Mumbai International) in the making.
He added that Spicejet recently renegotiated several contracts with Bombardier Aerospace (BBA, Montréal Trudeau) concerning the Dash 8-400, which has so far proven lacklustre.
"I will give this aircraft two more quarters. If they are able to give us profits in that time period, then they can stay. As of now, we have fourteen Q400s and twenty B737s [Editor's note - nineteen B737-800s and one B737-900(ER)]. We will add at least two-to-three 737s this summer," he said.
The added capacity will, however, not be used to open up new routes, but will instead be used to ramp up frequencies on existing, profitable services.
