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SpiceJet eyes more hubs for Bombardier run, PE Firm TPG Capital seen in talks to acquire stake

22 Aug 2011 Evaluate

Low-cost air carrier SpiceJet plans to open two hubs, one each in the southern and western parts of the country as part of the second phase of expansion of its regional operations through Bombardier aircraft. The company will have only one base for the first five airplanes but two more bases, which would be only in a metro city, will be added for 10 more. One of the bases could be Chennai and the other would be in Gujarat. In a later period, the company may also look at adding one more base in the northern part of the country.

The airline has announced to start regional operations with the 70-seater Bombardier Q400s from next month. The first base of the regional operations is in Hyderabad and will connect Aurangabad, Bhopal, Indore, Mangalore, Rajahmundry, Tirupati and Vijayawada. It has ordered 30 planes with Bombardier — 15 fixed and 15 on options. SpiceJet is to get the first plane next week and 15 planes before July next year. These planes could be utilised for up to 11.5 hours a day and would constitute around 40 per cent of the total operations at a later stage. The biggest benefit of these smaller planes is that jet fuel for them comes at only four per cent tax and the airline does not have to pay landing and parking charges to the airport. This venture will start paying from the second year of operations.

Private equity firm TPG Capital, which made a ten-fold profit from investment in Continental Airlines in the US, is negotiating to buy a minority stake in SpiceJet which plans to expand under new owner Kalanithi Maran. SpiceJet, owned by the promoter of south India's biggest media company Sun TV, has been working on raising $270 million to fund purchase of aircraft that will help it gain market share in feeding the fast growing smaller cities. Though private equity companies are averse to investing in aviation companies in India, TPG might buck that trend as it has a track record of investing and turning around airline companies. Though, there is no certainty that the negotiations will result in a transaction.crackcrack

SpiceJet Share Price

13.88 -0.26 (-1.84%)
17-Apr-2026 16:59 View Price Chart
Peers
Company Name CMP
Interglobe Aviation 4638.75
SpiceJet 13.88
Raymond 422.05
Global Vectra Helico 203.85
Taneja Aerospace 281.55
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