SpiceJet likely to sign termsheet with PE soon: Neil Mills

SpiceJet is close to signing a term sheet with one of the two private equity companies, reports CNBC-TV18's Shereen Bhan.

In an interview to Bhan, management of SpiceJet very categorically said that the company would prefer to do a deal with the foreign carrier, if the regulations do permit that. As of now the government has not taken a decision but SpiceJet has been in conversation with two foreign private equity partners and are close to signing a term sheet with one of them The airline company is willing wait to see which direction the government actually moves but that conversation is parallelly continuing.

Neil Mills CEO of the company denied Emirates, Air Asia and British Airways denied  picking up stake in SpiceJet. "The managements of these three companies have said that the risk reward ratio currently does not merit an investment in a domestic Indian carrier," he said. However, he agreed that foreign carriers have expressed interest in picking up a stake in SpiceJet if the regulations do change.

He also said that SpiceJet will become the first company to actually start direct air turbine fuel (ATF) imports. The company has got clearance from Directorate General of Foreign Trade (DGFT). SpiceJet has now tied up with multiple third party vendors and is hoping to do the first shipment before the end of July. Reports had suggested that Reliance Industries was the company that they had tied up with.

When asked that his peers within the industry suggested that this is really not going to have a significant bearing as far as cost reduction is concerned, he said that they haven't given a commitment to the shareholders but they would like to see that fuel cost down by about a 1%, as far as the total fuel bill is concerned.

Mills added that the company has seen reductions in ATF prices but rupee depreciation has negated the reduction in ATF prices up until last week. He is expecting to see a change now but until last week the deprecation negated the kind of reduction in ATF prices that they had seen.

In terms of capacity addition, SpiceJet as Kotak pointed out is going to be very few companies looking to add capacity.

Neil Mills also said that the company will be adding about six aircrafts.