Marans exit SpiceJet, transfer ownership to Ajay Singh

Sun Group chairman Kalanithi Maran and KAL Airways, who control a 53-per cent stake in SpiceJet, have signed an agreement with the airline's co-founder Ajay Singh to hand over ownership and control of the ailing airline.

The transfer is part of the scheme to restructure and revive the airline and the sale of stake is expected to end troubles for the cash-strapped low-cost carrier. Financial details of the transaction were not available.

SpiceJet, India's second-largest budget carrier, has been struggling for months, and was recently forced to ground its fleet after fuel suppliers refused to extend credit facilities.

Like Kingfisher Airlines, SpiceJet too was on the brink of collapse, but help came from Ajay Singh, who helped set up the low-cost carrier in 2005.

Singh, a businessman who is credited with coining Prime Minister Narendra Modi's winning campaign slogan, "acche din", so far owned about 5 per cent in SpiceJet. It's not clear yet how much Ajay Singh paid for SpiceJet to Kalanithi Maran.

Singh along with a clutch of investors led by investment bank JP Morgan is likely to have injected around $250 million (Rs1,550 crore) in the ailing airline. SpiceJet needs an immediate infusion of about Rs2,000 crore to survive.

"The board has further directed the company to take further steps to implement and undertake all necessary steps, including to make the appropriate application before the ministry of civil aviation, government of India for seeking approval of the 'Scheme of Reconstruction and Revival for the takeover of ownership, management and control of SpiceJet Limited," SpiceJet said in a statement.

SpiceJet, which employs around 5,000 people and operates 230 flights a day, remained grounded for a day in December last year because of the cash crunch. It has since allowed 43 of its pilots to leave the airline without serving the mandatory six-month notice period.

The airline has reduced its Boeing plane fleet to almost half from 35 in July last year.

However, with the deal close to being finalised, the civil aviation ministry extended the credit time to pay dues to state-run Airports Authority of India, giving the struggling airline more breathing space.

Maran had bought a majority stake in SpiceJet from its promoter Bhupendra Kansagra and distressed-assets buyout specialist Wilbur L Ross in 2010.