India carrier SpiceJet's new owners plan to cut fleet, shrink network-sources

Fri Jan 16, 2015 5:27am EST
 
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* Aim to cut Bombardier aircraft from fleet, focus on major routes

* May defer 8 Boeing 737s due to be received in 2015

* Shares surge daily max permissible 10 pct on new ownership plan

By Siva Govindasamy and Tommy Wilkes

SINGAPORE/NEW DELHI, Jan 16 (Reuters) - The prospective owners of Indian low-cost carrier SpiceJet Ltd plan to cut the airline's fleet, shrink its network and return to a "plain vanilla" business model to achieve profitability, two people close to the investors said.

Their plans include culling the 15 Bombardier Q400 regional aircraft from the airline's fleet and sticking to Boeing 737 narrow body jets, and focusing on profitable services to and between India's major cities, said the sources.

SpiceJet said on Thursday that Ajay Singh, who helped found the airline in 2005, has agreed to buy a controlling stake from billionaire majority owner Kalanithi Maran's Sun Group.

He was expected to submit his plan, which could involve an investment of $240 million, by the end of January. The plan would need regulatory approval.

Singh told Reuters on Thursday the airline could break even in the next financial year by keeping its costs low and taking advantage of low oil prices.   Continued...