The new owner of India's SpiceJet, who is buying a majority stake in India's SpiceJet, is likely to decide on a name change and confirm a new CEO only around end-August.
Kalanithi Maran, who owns the Chennai-based Sun TV network, bought a 38% stake in the low cost carrier for 7.39 billion rupees ($158.2 million) on 12 June through his privately-held vehicle KAL Airways from American equity firm WL Ross and the carrier's original owner Royal Holdings Services.
An open offer by Kalanithi for an additional 20% stake in the Bombay Stock Exchange-listed carrier closes in late August. Since then, Dubai-based investment house Istithmar has sold a 6% stake in SpiceJet to investors after converting its foreign currency convertible bonds (FCCBs) to an equity stake. However, it is not clear if KAL Airways bought Istithmar's stake.
SpiceJet is expected to name a new CEO around end-August to replace Sanjay Aggarwal, who resigned in early July after KAL Airways bought its initial stake and was replaced by board member Kishore Gupta on an interim basis.
The carrier could be renamed Sun Airways, says an industry source familiar with the deal, but that decision will be made only around end-September. Other sources add that there are unlikely to be drastic changes to the carrier's operations when a new management team is in place.
"The new board members have been identified and the officials from Sun are in the process of picking a new CEO. They want to ensure that this is someone who has experience in the low-cost market, and especially with both domestic and international expansion," says a source familiar with the deal.
A second source adds that SpiceJet's focus on keeping its costs low, its successful marketing campaigns, high aircraft utilisation rates, and a gradual approach to expanding its network appealed to Kalanithi Maran. As result, he is unlikely to make any "dramatic changes" to the carrier's operations.
"Ultimately, he bought into SpiceJet knowing that it has a successful model and brand, especially in the competitive Indian market where well-run low-fare carriers will continue to make headway against the established full-service airlines."
The carrier is also eligible to start flying on international routes, allowing it to increase its aircraft utilisation and focus on some high-yield routes that supplement its domestic network. A decision on the start date "will be made shortly", and the focus will be on nearby destinations like Colombo, Kathmandu and Southeast Asia.
However, Kalanithi Maran is also willing to help fund the carrier's expansion, especially its next round of aircraft purchases. SpiceJet officials have said that the carrier will stick to narrowbodies - the airline operates a fleet of Boeing 737-800/900s - but industry sources say that regional jets for short-haul domestic routes could be on the cards as well.
Source: Air Transport Intelligence news
