SpiceJet Timeline:

As recent as August, the airline seemed headed towards an improbable

turnaround. Buoyed by recurring sales, SpiceJet rapidly increased market
share and topped passenger loads. Losses fell by nearly half in the
September quarter from a year ago. Now, it is struggling to stay aloft,
saved only by a last-minute intervention by the aviation ministry. Since
July, when SpiceJet climbed to No. 2 in terms of the number of
passengers carried by an airline, the stock has tumbled 8%, losing nearly
Rs 100 crore in market capitalisation.

Major Events(majorly refer to the above 2 pics):

1. Media baron Kalanithi Maran of the Chennai based Sun Group
acquired SpiceJet in 2010 from Ajay Singh and Bhulo-Kansagra(cofounders) . That meant the airline required frequent cash prop-ups
from Maran, who has invested more than Rs 1,500 crore to date,
more than half the amount between October 2010 and December
2014. He is the largest shareholder with a 58.46% stake, owing to
these equity infusions .

2. Losses were overlooked and cash infusions continued because of a

strong belief that the airline would find an investor, with rumours
of a foreign airline buying as well after 49% FDI in aviation was
introduced.
3. June 2013, co. stops paying statutory dues like service tax and TDS
hoping for funding from an investor. Reckless, but arnd the same
time, it had begun talks with PE firms like TPG Capital & Indigo
Partners. They were to invest $200 million & Maran would have a
controlling stake. A deal looked imminent in Aug 2014 after a year
of talks
4. July, 2014: SpiceJet posts a record five fold increase in loss for FY
14 at rs 1003 crore. But it rises to no.2 in market share and rank 1
in passenger loads
5. August, 2014: CBI presses charges of criminal misconduct and
corruption against Maran and his brother Dayanidhi Maran, former
IT& Telecom Minister in relation to the Aircel-Maxis deal. The PE
funds pull out. Records loss of 124 crore for Q1 15
6. Things got worse. Tax authorities got to know about the deferred
payments and the strategy backfired. SJ was forced to pay rs 380
crore worth of dues between Aug and Nov. This accelerated
payment of dues had to come at expense of other liabilities for eg.
To the aircraft lessors, Aircraft authorities. As a result, 9 planes
were handed back between October-November.
7. The sudden reduction in planes led to sudden cancellation of
flights, upto 110 flights per day. DGCA stepped in on Dec 5.
Prevents booking beyond 30 days, cancels 180 slots across the
country
8. Aviation ministry under Gajapati Raju nudges airport authorities to
be lenient, allow SJ to defer dues. This probably will be the
turning point if SJ makes a comeback.
Rest refer to the pics
Current Situation: Total dues to all parties: 1249 crores(as of Dec
14)Ajay Singh is back. Maran is more than happy to exit. Snigh has
presented a turnaround plan to aviation ministry that involves
pumping of $200 million or approx. 1200 crore by him, JPM and 2
other invesotrs.
Biggest Mistake that SpiceJet made: Overlooking losses,
deferring obligations in hope of investor. The gamble didnt pay off.
Factors that are required/helpful to turn-around:
1. FUNDING! When you have more than 1200 crore of losses
and your operations are not generating enough cashflows,
you need external funding.
2. Singh has personal attachment. Plus passenger demand has
been growing especially after change of govt.

3. Oil Co.s cut jet fuel prices by further 12.5% recently. Given
that crude has gone down by more than $40 since June,
slightly more can be cut. This is a huge relief as 40% of
operating cost is the fuel. Even with reduction of 12.5%, SJ
maybe able to save 400 crores annually.
4. To avoid another Kingfisher, govt will help as much as
possible. SJ situation right now is much better than KF was.