SpiceJet up 6% on a likely stake sale to Qatar Air

Moneycontrol Bureau

Shares of SpiceJet rose around 6% on news reports suggesting that Qatar Airways may buy stakes in the carrier. According to a Times of India report, the stake sale  transaction is likely to be concluded by March.

The no frills carrier has a market share of around 20% and its average load factors were around 75% in 2012. The airline reported a Rs 240 crore loss in September quarter against a 10 crore profit,year-on-year due to high fuel cost.

The airline's management has in the past never ruled out a stake sale possibility to a foreign investor after the government announced foreign direct investment into the sector.

However, the Sun Group which owns SpiceJet has denied any such development.

The airline has also collected around Rs 200 crore through advance bookings during the mega ticket sale offer which concluded on Jan 13.

At a time when the sector is bleeding and predatory pricing is considered a sin, SpiceJet's offer surprised customers, but nevertheless the airline announcing grand sale to beat lean season lasting till April, cannot be ruled out.

Insiders say, SpiceJet has upset rival carriers for its prompt strategy to ensure loads during the lean season. However, slashing fares to lure customers cannot be sustained in an industry loaded with heavy losses.

Meanwhile, the initiative may help the airline increase market share. Also this festive season, demand (Oct-December) was not as strong as earlier years forcing SpiceJet to drop prices.