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karatecatman · Guest

www.bloomberg.com/apps/news?pid=20601091&sid=az.3AT6rbgVA
SpiceJet May Raise $50 Million; Plans Flying Overseas Subramaniam Sharma and Vipin V. Nair

Oct. 28 (Bloomberg) -- SpiceJet Ltd., an Indian low-fare airline that counts billionaire Wilbur Ross among its investors, may raise as much as $50 million by selling shares to fund expansion and start international flights.

The carrier is considering sale of shares to select investors, Chief Executive Officer Sanjay Aggarwal said in an interview today, without specifying a time frame. SpiceJet doesn’t need the money to fund current operations and will boost its cash reserves to fund growth, he said.

SpiceJet is seeking to tap overseas travel demand to offset rising competition in the domestic market, as bigger rivals including Jet Airways (India) Ltd. convert more of their local flights to low-fare services. Under Indian rules, SpiceJet will become eligible to start international flights when it completes five years of operations in May and has a fleet of 20 aircraft.

“We are saying how do we use that opportunity to increase our aircraft utilization,” Aggarwal said in Gurgaon, where the airline is based. “What we are focused on is growing profitably.”

The carrier is evaluating Kathmandu in Nepal, Colombo in Sri Lanka, Dhaka in Bangladesh and Male in Maldives as destinations, Aggarwal said.

SpiceJet will compete with Jet Airways, India’s biggest carrier by market value, Kingfisher Airlines Ltd. and state-run Air India if it starts flying overseas.

Jet Airways yesterday reported its biggest quarterly loss in at least four years as a pilot strike led to ticket cancellations.

Low Fare Rush

Airlines in Asia’s third-biggest economy are adding more low-fare seats that are shorn of frills such as food and beverages to attract more passengers.

Jet Airways has two-thirds of its domestic capacity under the low-fare brand JetKonnect. Air India, the national carrier, plans to set up a discount airline for the domestic sector under its Air India Express brand.

Low-fare services will account for about 85 percent of the total airline seats on offer in the next 12 to 24 months, compared with 30 percent three years earlier, Aggarwal said.

Jet Airways, which started flying overseas in 2004, got about half its revenue in the year ended March from international operations, according to data on the Bloomberg.

Challenging Situation

“At a time when airlines are facing a challenging situation in India you need to work hard to consolidate and improve the domestic operations,” said Binit Somaia, South Asia Director at Centre for Asia Pacific Aviation, an industry consultant, in Sydney. “SpiceJet needs to start international operations carefully and shouldn’t do it just because you are allowed to.”

SpiceJet will expand its fleet to 26 by January 2012 from 19 Boeing Co. planes now, Aggarwal said.

SpiceJet rose 4 percent to 37.4 rupees in Mumbai trading, after falling as much as 9.9 percent today. The shares have more than doubled since the start of the year, compared with a 69 percent gain in the benchmark Sensitive index of the Bombay Stock Exchange.

The carrier narrowed its second-quarter loss to 1.01 billion rupees ($21 million) from 1.98 billion rupees a year ago, it said in a statement yesterday. It had posted a profit in the first quarter.

SpiceJet expects to break even in the fiscal year ending March 31 if oil prices and rupee-dollar exchange rates remain stable, Aggarwal said.

“Now we have a very good balance of demand and the fares in the market,” said Aggarwal.

maut3000 · Member Joined: 14 Mar 2007 Posts: 160 Location: Mumbai

I would suggest them a "Go slow" policy on international expansion.

HAWK21M · Posted: Thu Oct 29, 2009 1:38 pm Post subject:

Concentrate on getting into profits before moving to the middle east,thereafter beyond.
regds
MEL.
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Think of the Brighter side !!!

G-BYGB · Posted: Fri Oct 30, 2009 11:47 am Post subject:

Spice Jet should wait for a significant growth in the no.of Indian pax travelling abroad before starting International operations.
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www.flickr.com/G-BYGB photos

tayaramecanici · Member Joined: 03 Jan 2007 Posts: 648

Couldn't be a better time to spread the brand intl.

As mentioned by the muppet from CAPA, Aviation in India has been tarnished due to the 3 (AI, 9W & IT) musketeers and most analyst can't see beyond the 3.

Spice has created a respectable brand with a decent domestic market share. I've flown them a couple of times during my visits to India and found them to be thoroughly professional with pleasant interiors and courteous crew.

Its time they offer these same services to the Intl pax, let the masses decide their choice. Things are not going to get any better soon. Once the global economy starts picking up, all the parked up capacity will be re-introduced.
Its best to hit the competition when they are on their knees rather than let them stand on their 2 legs and swing one at you later.

I have my faith in Spice and Indigo, they will claim India's righfull position in the aviation world.

Nimish · Posted: Fri Oct 30, 2009 4:41 pm Post subject: