Dubai: SpiceJet has offered to pay Rs6 billion in cash in a share transfer case with its former promoter Kalanithi Maran and his firm KAL Airways for a full and final settlement of all disputes, the airline said in a statement.
Maran, owner of Sun Group and former promoter of SpiceJet, had previously moved Delhi High Court, seeking attachment of SpiceJet promoter Ajay Singh’s shareholding after the airline failed to deposit Rs2.43 billion in his name. The case, which goes back to 2017, is related to a dispute arising out of non-issuance of warrants in favour of Maran, after the transfer of ownership to Ajay Singh — the low-cost carrier’s current promoter.
SpiceJet, which made the offer during a Supreme court hearing today, said out of the principal amount of Rs5.78 awarded in arbitration, the airline has already paid Rs3.08 billion in cash and deposited a bank guarantee of Rs2.70 billion. The court has advised the other side to consider the proposal of SpiceJet and has listed the matter on February 14. Earlier an arbitration tribunal consisting of three retired judges from the Supreme Court had rejected the damages claim of Kalanithi Maran and Kal Airways against SpiceJet.
To and fro ownership
In 2010, Singh sold a majority stake in the airline to Maran for about $98 million. Immediately after Maran’s takeover, Spicejet reported profits in 2010 and 2011 after a decade of losses. With Maran at the helm, Spicejet aggressively expanded its fleet and started flying more routes, using heavy discounts to lure passengers.
Although this strategy had some short-term benefits, Spicejet was bleeding cash. Singh came to the airline’s rescue in 2015 by taking a 58 per cent stake. The airline was hit particularly hard during the pandemic, especially after the imposition of state-wide lockdowns that decimated domestic travel. Spicejet mostly relied on its cargo unit – SpiceXpress – to offset some of the losses.
In its latest quarter, the carrier’s loss widened to $75.5 million, compared to the same period a year earlier, with higher fuel costs hurting margins. SpiceXpress, which reported a 5 per cent quarter-on-quarter growth, was the only bright spot.
