Spice Jet & It’s Survival

Indian Aviation1932- Tata Airlines1948-Air India1953- Nationalization 1986-Private Airlines permitted as a Air Taxi1991-Open sky policy1994- Private Careers permitted to operate

scheduled services2003-LCC

Spice Jet Spice jet is a low-cost airline based in New

Delhi. It began service in 23 May 2005. 340 flights; 48 DestinationsFleet size :53 aircraftTo become India’s most preferred low cost

airline, by providing the lowest air fares and the highest consumer value to the price sensitive consumers of the country.”

S.W.O.T

Strength Weakness Strong backing by the

PromotersLCC segment is ever

growing in the countryOne of the largest low

cost carriers in IndiaHas a reach to around

35 Indian destinationsGood presence in the

market due to its branding and advertising

Low market share due to presence of significant competition

no international destinations

Dependency on leased assets

Small load deficiency compared with competitors

S.W.O.T

Opportunity Threat Middle Class taking

to the skies More opportunities

to grow on popular routes and destinations

International tie-ups would boost brand image and reach

Strong competition in LCC segment

Rising Fuel Cost Changing govt

policies

Spice Jet in to Shades Kalanidhi Maran acquired 37.7% stake in

Spice jet in June 2010.In 2012, Spice Jet suffered from a loss of

over INR390 million (US$6.1 million) In 2012, Despite the losses, Kalanithi Maran

increased his stake in Spice jet by investing INR1 billion (US$16 million) in the airline.

50%-Discount

Reasons for downfallFrequent offers were not a good idea  High airport charges, steep fuel cost hurt

most Global investors are shying away from

Spice JetPoor Administration Load factor

Operating Expense FY 2014 FY 2013(Rs. In

million)

FY 2013(Rs. In

million)

Variance

Aircraft fuel and oil 32,526.60 28,033.15 16%

Lease rental-aircraft, rotable and engines

10,531.74 8,081.02 30%

Aircraft maintenance cost 9,932.53 6,737.56 47%

Aviation insurance 329.28 322.22 2%

Landing, navigation and other airport charges

4,740.10 3,540.11 34%

Inflight and other passenger amenities

534.50 523.96 2%

Operating software charges 741.84 571.03 30%

Aircraft delivery and re-delivery costs

291.48 80.04 264%

Other operating expenses 453.91 215.67 110%

Operational ErrorsGround OperationsI. BMAII. BBA RAMP OperationsI. Fueling II. ATC clearance Flight operations

SuggestionsThe Spice Jet can deal the financial distress

by disposing of real properties and may opt to sell the property to pay the creditors so that working capital of the companies will improve. The Operating costs and other costs can be financed by such activity.

The spice jet can reframe the terms and condition with creditors to extend the credit period and the new interest rate to save the company from bankruptcy.

Continues..The merger or strategic alliance can put

the distressed company back in good financial position. The company can use its authorized capital by offering the stake to foreign companies, instead of adding leverages into capital structure.

Infusion of liquid assets can reframe the airlines.

Selling of fleet and avoiding operational expenses.

Last but not least..