Tatas offered seat on Spicejet management board

The SpiceJet management has invited the Tata group to take a seat on the board of the Delhi-based low cost airline. The Tata group company Ewart Investments had taken a 7% stake in the company with an investment of about $17 million, which does not entitle a board seat. However, the SpiceJet management says the company’s experience will bring value to the board. The Tata group has said the investment in the airline is purely financial and has nothing to do with their earlier ambitions in the aviation business. The Dubai-based investment group Isthitmar, already has one director on the SpiceJet board and will have one more, once the share allotment is complete. SpiceJet has decided to issue $70 million worth of stock to investors like the Tatas, Isthithmar, Goldman Sachs group and BNP Paribas. The 50 million new shares are being issued at Rs 52 each, resulting in an equity dilution of 23-24%, SpiceJet CEO Siddhanta Sharma said. The move is aimed at raising funds for fleet expansion.

The airline made losses of Rs 50 crore on revenues of Rs 700 crore in the nine months ended November 2006. The airline’s average fare during the December quarter was Rs 2,600, he added. SpiceJet currently sells about 55% of its tickets online, about 22% are sold by travel agents, 20% through call centres and the rest through online travel portals. The airline plans to increase its night flight frequencies to make it a 24-hour operation, Mr Sharma said. It already operates a Delhi-Ahmedabad-Pune flight that completes its return at 5am. The response for night flights is good and more frequencies will be added on the night operations, said Sanjay Kumar, vice-president sales and marketing for the airline. The low cost carrier currently has an aircraft utilisation of 12.5 to 13 hours a day, he added. It will acquire its 11th aircraft in February and aims to more than double its fleet to 28 over the next two years.

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