24 July 2013
NEW DELHI/MUMBAI: SpiceJet CEO Neil Mills, the closest India had to an outspoken airline boss, has resigned, the abrupt departure nearly a year-and-a-half before the end of his contract catching the industry by surprise and setting off a fresh round of speculation that an investment is at hand.
The resignation happened during Mills' visit last week to Chennai to meet Kalanithi Maran, the promoter of SpiceJet's parent company Sun Group, according to two persons familiar with the matter. "No official confirmation has come nor has an email been sent to employees," said the first person, a senior executive, requesting anonymity.
Mills did not answer repeated calls and texts to his phone.
"It is still a rumour," a spokeswoman for SpiceJet said. "We do not comment on market rumours or speculation," she added.
Mills was a hands-on CEO and the face of the airline, handpicked by Maran from low-cost carrier Fly Dubai when he bought the airline from non-resident investor Bhupendra 'Bhulo' Kansagara and buyout specialist Wilbur L Ross in 2010. His contract runs until 2015.
The departure of Mills comes just two weeks before the low-cost airline's board is due to meet to finalise its earnings report for the June quarter. The second person familiar with the matter said the board is yet to take a call on the resignation.
Mills' exit also comes about two months after the low-cost airline reported another poor earnings, a bigger-than-expected loss of Rs 186 crore in the March quarter. The eight-year-old airline had posted losses of Rs 606 crore and Rs 191 crore for 2011-12 and 2012-13.
The Maran family, which owns a profitable television network and a direct-to-home telecast company, has invested Rs 350 crore in SpiceJet in the past three years. With the declining rupee, a turnaround may become more painful, as almost half the cost incurred by Indian carrier is on account of fuel costs.
However, the senior executive said Mills' resignation (or sacking) is not related to the airline's performance because the whole industry is a shambles, but a precursor to a potential deal. "I have seen two deals in my tenure at the airline."
"We continue to be confident of the future," Mills said in a statement after the March earnings were announced.
SpiceJet has been linked to a deal with a number of airlines, especially Qatar Airways and Kuwait Airways, since the aviation sector was opened to a 49% investment by a foreign airline last September.
Mills, 42, a 17-year veteran of the aviation business and an accountant by profession, had won accolades for turning around SpiceJet after he took over. The introduction of new routes - to Guangzhou in Chinaand Kabul in Afghanistan - to take the pressure off the domestic sector, was seen as a masterstroke. Mills was also credited with the move to acquire Q-400s, the 80-seater narrow-bodied Bombardier planes that helped SpiceJet tap latent demand from smaller towns.
Mills also showed his competitive flair when he offered a million tickets at Rs 2013 a ticket in January. The move gained a lot of heartburn from rivals and the wrath of the aviation regulator for igniting a price war in an industry that was already bleeding from an "irrational price strategy". Mills reasoned that the move helped SpiceJet fill up a chunk of seats during a lean season period.
Published by: The Economic Times