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'Premature' Spicejet Says Of Stake Sale Reports as Scrip Surges Email this page
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Mumbai: Shares of budget carrier SpiceJet gained around five percent in intra-day trade at the Bombay Stock Exchange (BSE) on the back of reports that Middle East-based Qatar Airways is planning to invest in the company.
However, the carrier controlled by media baron Kalanithi Maran, clarified that there was no such transaction or talks in place.

"Though few investors have evinced interest in the Company post Government of India allowing FDI in civil aviation sector to foreign airlines, it will be very pre-mature to comment on the possibilities of any fresh equity issuance to such interested parties or confirm or deny names of any specific entity," the low-cost carrier said in a statement to the BSE.

The company scrip at the BSE jumped 4.65 percent or 2.05 points at 46.10 per share from its previous close of 44.05 per share in late afternoon trade.

Talk of a possible stake sale has been doing the rounds for several months, ever since the government allowed foreign airlines to pick up 49 percent shares in domestic carriers.

The LCC had the third largest domestic market share of 19.5 percent in November, 2012 after IndiGo and Air India. It is also aggressively trying to expand both its domestic and international network with a fleet size of about 51 aircraft which includes 15 Q400 NextGen turboprop of Bombardier and Boeing 787-800 aircraft.

The government on Nov 9, 2012 also allocated new flying rights to domestic passenger carriers which included SpiceJet. The LCC got approvals for new flight services to Lucknow-Al Najaf; Varanasi-Al Najaf; Delhi-Macau and Delhi-Ho Chi Minh City.

The carrier also expanded its international network By adding new flights between Kochi-Male, Kochi-Dubai and Dubai-Ahmedabad.

The airline was also the first private passenger carrier to have received government's approval for importing aircraft turbine fuel (ATF) directly on April 18, 2012.

Aviation analyst Sharan Lillaney, of broking firm Angel Broking, told IANS that the SpiceJet is one of the favourites amongst Indian passenger carriers which can attract FDI.

"SpiceJet is a good buy for international airlines as the airline has very little debt and is in the fastest growing sector which is low cost. So valuation of SpiceJet is going to be very attractive," Lillaney said.

Earlier, the government on Sep 17, 2012 allowed foreign airlines to invest up to 49 percent in private domestic carriers.

Foreign carriers were so far not been allowed to directly invest in Indian carriers for security reasons, although 49 percent FDI by non-airline players was allowed.

The Indian civil aviation sector has been going through a tough operating environment as high fuel and interest costs hav hurt it. The government expects that the decision will help bring in more funds to the airlines who have been cold shouldered by banks.

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