SpiceJet cargo arm set for IPO

SpiceJet’s finances have undergone a sea change since 2005 when the airline was facing severe financial difficulties, currently emerging as India’s second-largest carrier. SpiceJet will need money soon; the carrier is looking to place an order for at least 100 aircraft, with an aggregate price tag of around $13 billion. While a Boeing operator, SpiceJet has been courted by Airbus, at least since the carrier’s 13 Boeing 737MAX aircraft were grounded. In March, India joined a wave of countries in ordering suspension of operations of MAX-variant aircraft until safety is certified. 

Boeing expects that the U.S. aviation watchdog will certify the safety of the 737MAX before the end of 2019. Even so, India’s civil aviation authority is expected to delay return to service by performing its own certification before allowing Indian carriers to operate the variant. SpiceJet is now the only Indian carrier to have placed an order for the aircraft. 

Jet Airways, once India’s largest full-service airline, was the other Indian carrier operating the MAX variant, but that carrier temporarily suspended operations in April in the face of financial difficulties. As noted in a previous FreightWaves post, before suspending operations Jet Airways owned a 10% to 15% market share of cargo emanating from India. The future of Jet Airways remains uncertain as efforts to land an investor to return the carrier to the air so far have been unsuccessful.

SpiceXpress is not the only Indian aviation entity that is planning to launch an IPO. 

After having explored the possibility of launching an IPO several times in the past, Mumbai-based low-cost carrier GoAir, owned by Indian family-run conglomerate Wadia Group, has hired ICICI Securities, Morgan Stanley, Citibank and JM Financial to lead an IPO to generate $400 million to $450 million, based on the current exchange rate. GoAir is expected to launch the IPO during the first calendar quarter of 2020.

GoAir, the fourth-largest airline in India, according to data released by the Directorate General of Civil Aviation for May 2019, has been in an expansion mode, adding new destinations and increasing frequencies on existing destinations. The carrier operates 330 daily flights to 24 domestic and seven international destinations.