Mumbai: Indian carrier SpiceJet Ltd. is in talks with foreign airlines to sell a stake, a person with direct knowledge of the discussions said on Tuesday.
The talks are “very fluid at the moment... nothing concrete,” said the person who didn’t want to be named.
The person didn’t name any foreign airlines SpiceJet is talking to for a stake sale.
Some other local carriers are also looking to sell their stakes to foreign airlines. Jet Airways (India) Ltd. and Kingfisher Airlines Ltd. said recently that they were in talks with Abu Dhabi-based Etihad Airways.
The talks started after India in September allowed foreign carriers to buy up to a 49 per cent stake in local airlines. Previously, foreign investors, but not foreign airlines, were allowed to own stake in local carriers.
The policy change was to help India’s cash-strapped airline industry, which is battling high fuel costs, poor airport infrastructure and increased competition from foreign carriers flying into Indian destinations.
SpiceJet is less affected by the troubles compared with Jet and Kingfisher. Its majority shareholder, media baron Kalanithi Maran, had pumped in money in the airline by increasing his stake to fund its operations and expansion.
However, it needs cash to fund its plane purchases. In 2010, SpiceJet ordered 15 Bombardier Q400 jets for $446 million. It also has an outstanding order to buy Boeing aircraft.
Meanwhile, Maran’s Sun Group denied a report that SpiceJet was in talks to sell a stake to Qatar Airways.
The Times of India newspaper, citing sources it didn’t name, reported SpiceJet was in discussions with several foreign carriers and another investor and that the Gulf airline would be the “most likely” buyer of a stake. It added the deal was likely to happen in the January-March quarter. “There is absolutely no truth in the report’s information that we are in talks with Qatar,” Sun Group Chief Financial Officer S.L. Narayanan told The Wall Street Journal over the phone.
Qatar Airways couldn’t immediately be reached for comment.
Shares of SpiceJet rose 8.5 per cent on the report, but pared their gains later. They were 5.1 per cent up at 46.30 rupees midday on the Bombay Stock Exchange, where the benchmark index was up 0.2 per cent.