Spicejet attracts Ryanair interest

The Indian low-cost carrier model is being looked with interest not only from domestic players like Jet, Kingfisher and Paramount but also from foreign players. Dublin-based Ryanair, Europe’s biggest low-cost carrier is learnt to be interested in picking up a stake in SpiceJet.

The promoters, Kansagaras may divest 20-25% stake in favour of Ryanair for consideration of around Rs 200 crore, which could be used to fund its expansion plans of launching overseas services and increasing fleet size from current 11 to 18.

But according to Indian laws, foreign entities can old only upto 49% stake and already 46% of Spicejet holding being foreign, Ryanair has just 3% left to be picked up. So the only option for them is buy out share of existing foreign investors.

For Ryanair, Spicejet may be a perfect fit as latter has become the first low cost airline in India to become profitable reporting a net profit of Rs.18.5 crore in Q1 of FY08. Ryanair has also been moving out of its traditional European territory by expanding its presence overseas and picking stakes in Mexico’s Aerobus, Las Vegas-based Allegiant Air and Australia’s Tiger Air.

And with top-end reshuffle at Spicejet management, some change could be on cards soon.