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AVIATION - SPICEJET TO RAISE EQUITY

Spicejet to raise equity through convertible bonds

No talks with Hindujas, fleet expansion on cards.

 

BY OUR AVIATION CORRESPONDENT 

23 August 2005: Budget carrier Spicejet is planning to raise equity through Foreign Currency Convertible Bonds (FCCB) of $90 million, issued in June and expected to close in September 2005, to fund its fleet acquisition plans. Spicejet was not in talks with any companies, including Hindujas for raising finances.

"We are not in talks with anybody including the Hindujas. Nobody has approached us and we have no information," spiceJet Chairman Siddhanta Sharma said.

"We have issued FCCBS in June this year for $90 million, which would be closed by September. We plan to use this funding for fleet acquisition," the Spicejet chief said.

Upon maturity, the bonds will be converted to stocks totalling about 17 per cent of the total equity of the company.

SpiceJet, which has three Boeing 737-800s now, is to acquire two more on lease in November and its first aircraft in January next year. The airline will start getting one aircraft every month between August 2006 and December 2007.

"We expect to have a fleet of nine to 10 planes in the first 12 months of our operations and 20 to 30 in the next three years", the Spicejet chairman said.

With the two leased aircraft joining in November, Spicejet will launch daily flights from Delhi to Kolkata and Chennai. The airline was planning to target under-served and potential sectors, now serviced by trains with travel time of eight hours and more.

To a question on revision of Spicejet's flight ticket prices in view of soaring fuel prices, Sharma said that the fuel costs had been rising enormously and Spicejet would be forced to pass on a "fraction of the burden to passengers when it becomes unbearable".

"If the fuel price is hiked by five per cent, we may raise fares only by two per cent and that will amount to a rise of around Rs 60 as our average ticket price is Rs 3,000," Sharma said.

The airline has also planned to commence services to Hyderabad, Patna and Srinagar in the near future.

Spicejet, floated three months ago, has an average passenger load factor of 84 per cent, with recording 96 per cent in May, 93 per cent in June, 86 per cent in July and over 82 per cent in August.

BY OUR AVIATION CORRESPONDENT

 

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