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US billionaire invests in Indian Spicejet
Indian low-cost carrier SpiceJet has been given a huge funding boost after American billionaire Wilbur Ross injected 3.45 billion rupees (£40 million) into the business.
Mr Ross accrued his huge fortune by acquiring and turning round struggling oil and steel companies and has clearly seen potential in SpiceJet.
Kingfisher drinks billionaire Vijay Mallya was also reported to be considering investment in the budget airline.
SpiceJet is the second largest low-cost carrier in an Indian aviation industry that has experienced significant growth in recent years.
The airline was formed in 2005 and presently services 18 domestic destinations with a fleet of 17 Boeing 737 planes.
Mr Ross has worldwide assets of around $7.9 billion (£4 billion) and is expected to take a seat on the SpiceJet board.
He stressed his belief in the "long-term validity of the low-cost airline model in India, and that fuel prices eventually will stabilise".
Despite the difficulties experienced by current high fuel prices, a few months ago passenger volumes on Indian carriers increased by around 30 per cent.
The investment from Mr Ross is expected to enable SpiceJet to complete its acquisition of a number of new Boeing airplanes to service passenger demand.
This also marks Mr Ross' second Indian investment following his $37 million acquisition of textiles company OCM India in 2006.
"For a while, when we were offered investments, the prices seemed quite high. Now prices are getting to a more realistic level, it will make it a little easier to find attractive situations," he said.
The billionaire has reportedly allocated around $300 million to invest in a wide range of Indian industries including steel and coal.
Airline News posted on 16 July 2008
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