June 18, 2008

SpiceJet Plans to Raise $100m

NEW DELHI: At a time when almost all airlines are bleeding due to high cost of jet fuel and poor load factors, raising funds is becoming an uphill task for them. While leading carriers like Jet Airways have kept their proposed $ 400 million rights issue on hold, low-cost carrier SpiceJet is going to appoint a merchant banker to raise $100 million for financing aircraft acquisition.

"Our board is going to meet soon and we will appoint a merchant banker who'll look at possible areas from where this money can be raised, including foreign shores like East Asia or US. We are going to adopt the debt-equity way for this money and are not in talks with any group for any takeover," SpiceJet executive chairman Siddhanta Sharma said. While there has been intense speculation that a major industrial group is eying the airline, Sharma denied any such move.

But apart from raising funds, like all carriers, it is also looking to cut costs. The airline, which has among the lowest operating cost in India, is now going to further reduce flights from the current 117 to about 94 by next month. Some other airlines are also learnt to be planning to reduce flights as the current cost of jet fuel means that they lose more money by flying more. "We have applied for a revised schedule for these flights,"

said Sharma.

Indian carriers are expected to post a nearly Rs 4,000 crore loss for the last financial year, with national carrier Air India's share going to be nearly half that amount - possibly its worst ever financial performan

ce. Losses for this fiscal are expected to be around Rs 8,000 crore.

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