DELHI – US billionaire Wilbur Ross is splashing out US$80 million to help save Indian LCC, SpiceJet.
Analysts at the Centre for Asia Pacific Aviation (CAPA) reports that Ross, a well known contrarian investor, is buying in through the purchase of foreign currency convertible bonds in the carrier held by UAE investor Istithmar and Goldman Sachs Group Inc.
“We believe in the long-term validity of the low-cost airline model in India, and that fuel prices eventually will stabilize,†Ross said.
CAPA said the prediction came on the same day the price of oil fell USS6 per barrel in New York, with hints that investors are finally linking oil with a weakening of the US economy.
“If Mr Ross is right, he may have picked the top of the oil market and can look forward to considerable upside in his Indian investment, as investors are certain to pile back into the battered airline sector if oil prices do head lower,†CAPA noted.
“If he’s wrong, Mr Ross will have helped prop up a carrier exposed to a sector tipped to lose around USS1.5 billion this year.
SpiceJet has a 10.5 percent share of the highly competitive Indian market (in Jun 2008), up from 8.3 percent in Jun 2007.
