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Posts Tagged ‘SpiceJet’

Billionaire Wilbur Smith, an American investor specializing in leveraged buyouts, will invest in “Loss-making” Spicejet, low-cost New Delhi based Indian Airline, by buying foriegn currency convertible bonds (held by Istithmar PJSC and
Goldman Sachs Group Inc.) worth $80 million (3.45 billion rupees). Wilbur Ross and Ranjit Nabha (chief executive of WL Ross India) are expected to join the board of directors for the airline.

Spicejet had been actively looking for capital and a lot of people had shown interest including Reliance’s Anil Ambani.

From Bloomberg

“`This investment reflects the fact that there is still
belief in the long-term potential of Indian aviation,” said
Binit Somaia, a director for the Indian sub-continent at the
Sydney-based Centre for Asia Pacific Aviation. “There is
interest from investors when assets are available at good
valuations.””

From BusinessWeek

“We believe in the long term validity of the low cost airline model in
India and that fuel prices eventually will stabilize,” said Chairman
and Chief Executive Wilbur L. Ross Jr. in a joint statement issued by
SpiceJet and New York-based WL Ross & Co.”

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An article in CNN-IBN, an Indian News Network, claims that Civil Aviation Ministry of India is considering scrapping the minimum five year domestic operations criteria for starting flights to/from International destinations. In the last 4 years, India has seen the start lot of new airlines that fly within the country like – SpiceJet, Indigo, Paramount, GoAir, Kingfisher etc.. These airlines currently do not qualify to fly international due to the five year rule. It should be good news for Vijay Mallaya (Kingfisher Airline’s Chairman) who is eager to start direct flights to US.

Instead of the five years rule, “It will be replaced by technical criteria, the number and the kind of
aircraft needed for international flights, pilots with the right flying
experience and other personnel and international compliance norms.
” (from here).

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Anil Ambani, successful Indian businessman who is the 6th richest businessman in world, is reportedly in talks to buyout SpiceJet, the Delhi (India) based low cost airline. Though the airline has reported that no formal offer has been sent by the Reliance head. Earlier, Anil Ambani had reportedly lost his bid to buy Air Deccan to Kingfisher’s Vijay Mallaya.

Indian Airline Industry, despite the huge growth, is losing a lot of money. I wonder if it is prudent to buy an airline, esp. with oil reaching the cost of $130+ per barrel.

Reminds of Richard Branson’s famous quote – “The fastest way to become a millionaire is to start off a billionaire and then buy an airline“.

Facts about Anil Ambani (from here)-

  • Net worth – US$45 billion (6th richest in the world)
  • Chairman of – Reliance Capital, Reliance Communications and Reliance Energy
  • Son of – Dhirubhai Ambani, founder of the Reliance Group.

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The 5 bankruptcies (4 US Airlines and 1 Hongkong based Airline) has turned beneficial for private airlines in India. The airlines are negotiating for aircrafts and pilots at low costs from the bankrupt airlines.

Highlights –

  • GoAir is negotiating 20 Airbus aircrafts at 20% below listed rates.
  • SpiceJet has decided to hire at least 10 pilots.

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