Mumbai: In a move that signals a fresh round of consolidation in the recession-hit aviation industry, budget carrier SpiceJet may pick 7.5 per cent stake in another low-cost airline IndiGo. “SpiceJet is in talks with IndiGo to purchase 7.5 per cent equity in the airline,” an industry source said on condition of anonymity, but key officials of both SpiceJet and IndiGo refused to comment on what they called rumours and market speculation.

SpiceJet is also looking for a position on the IndiGo Board, the source said, adding that “they are still discussing what the price should be”.

SpiceJet chief executive officer Sanjay Aggarwal said, “We do not comment on such rumours and speculations”.

IndiGo Airlines president Aditya Ghosh, said, “As a company policy, we do not comment on rumours”.

However, the two air-carriers are understood to have already held several rounds of discussions on the issue.

SpiceJet has even appointed a merchant banker for this purpose, the source said. But Spicejet had no plans for merger, the source said.

“The deal is simply for purchasing equity and not any merger. Both the airlines have different types of aircraft and separate management control. So a merger may be difficult.” the source said.

Aggarwal had recently said that, “if the right opportunity is presented, SpiceJet would be a buyer”.

“There are still investors out there and it will make economic sense if you have some consolidation in the space,” Aggarwal had said.

This would be the third instance when two competing domestic air-carriers have come together to form an alliance in the last three years.

Naresh Goyal-owned Jet Airways acquired Air Sahara in 2007. Kingfisher Airlines merged with budget carrier Air Deccan. Flag carrier Air India and Indian too had merged.

Besides, Jet Airways and Kingfisher have formed a strategic alliance to cut costs in light of the economic downturn.

source: DNA India

Tags: buy, india deals, IndiGo, indigo airlines, spicejet

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