SpiceJet will boost wingspread

KOLKATA: Low-cost carrier SpiceJet, which recently mopped up $64.5 million through a preferential allotment, is now busy drawing up strategies for its next round of funding, post 2008.

The company plans to raise $650 million for funding the acquisition of 10 more aircraft in 2009, to feed its network expansion. According to company sources, the carrier could approach the American Exim Bank for financing 85% of the quantum of $650 million while the balance 15% could be raised through a fresh round of private equity infusion.

Sources told DNA Money: “We may approach the American Exim Bank because of the attractive 2.5% interest rate …. Private equity participation could be one of our options for raising the balance funds.”

At present, SpiceJet is operating with 10 Boeing 737 800s and will be getting delivery of its 11th aircraft on February 11, Sanjay Mishra, vice-president, marketing and sales, said. Seven more will be pressed into service by the end of 2007 and an additional 10 by 2008-end. The target is to expand the network to 200 flights per day from the present 74.

At a time when most carriers are reporting losses in a bleeding environment of rock-bottom fares and cut-throat competition, SpiceJet expects to break even by February 2007, a company official said.

The company posted a net loss of Rs 34 crore last year; in its recent a preferential allotment, in addition to the Tatas, the company offered stakes to Isthitmar, BNP Paribas, Goldman Sachs and KBC (UK) Ltd for $25 million, $15 million, $5 million, and $2.5 million, respectively.