SpiceJet may merge with JetLite

Consolidation is in the air, and there is buzz that SpiceJet may fly together with JetLite. CNBC-TV18's Gopika Gopakumar reports that SpiceJet is most likely to go in for a merger or an acquisition with JetLite. However, SpiceJet said a consolidation is not the only option to strengthen the industry. Analysts point out that since the industry is bleeding profusely, acquisitions will also mean a transfer of huge liabilities.

Here is a verbatim transcript of Gopika Gpakumar's comments on CNBC-TV18. Also watch the accompanying video.

The aviation sector could soon see a third round of consolidation. Experts believe that among low cost carriers, SpiceJet is most likely to go in for a merger or an acquisition. That's mainly because the airline's financial condition has improved thanks to funding by Wilbur Ross. JetLite, experts say, may be in SpiceJet's crosshairs. Something SpiceJet does not seem opposed to, in principle.

Ajay Singh, Director, SpiceJet said, "We do not comment on market rumours. But in concept, it is a good thing."

Sources say some low cost carriers are already in advanced merger and acquisition talks and JetLite might play a crucial role in this consolidation. We learn SpiceJet may look at taking over JetLite, as both airlines operate with Boeing aircraft, a factor that could make synergies easier. However, SpiceJet says consolidation is not the only option to strengthen the industry.

Ajay Singh added, "As a concept we believe that consolidation is a good thing. Just as capacity rationalisation is a good thing and there are several other steps that can be taken by the government and the industry to make sure that it is a healthy industry.

Analysts point out that since the industry is bleeding profusely, acquisitions will also mean a transfer of huge liabilities. Difficult, as no carrier may be able to come up with enough funds for an outright acquisition. That leaves "cashless mergers" as a safer option.