15/01/2015 6:13 PM IST | Updated 15/07/2016 8:24 AM IST

Co-Founder Ajay Singh Agrees To Buy SpiceJet From Maran

Hindustan Times via Getty Images
MUMBAI, INDIA - DECEMBER 17: Passengers gather outside a SpiceJet booking counter at Mumbai domestic airport seeking for refunds and status about their canceled flights on December 17, 2014 in Mumbai, India. Beleaguered budget carrier SpiceJet ran into more turbulence after all its flights were grounded for about ten hours before it made cash payments to oil companies enabling it to partly resume operations in the evening. (Photo by Vidya Subramanian/Hindustan Times via Getty Images)

A co-founder of Indian airline SpiceJet has agreed to buy a majority stake from its billionaire owner, pushing ahead with a long-awaited bid to revive the low-cost carrier that has been struggling for months to pay its bills.

The firm did not disclose financial details of the deal. Co-founder Ajay Singh could not immediately be reached for a comment. Singh, who helped set up the low-cost airline in 2005, had been expected to submit a rescue plan for SpiceJet, India's second-largest budget airline, by the end of this month.

SpiceJet was forced to ground its fleet briefly last month after it ran out of cash to pay creditors and its majority owner, Kalanithi Maran's Sun Group, said it would not put up any more money.

Maran and his KAL Airways Private Ltd owns nearly 59 percent of SpiceJet, assuming the full conversion of warrants and securities, according to Bombay Stock Exchange data. The stake is worth about $102 million at the current market price.

Shares in SpiceJet ended up 3 percent at 18.65 rupees on Thursday before the deal was announced.

The SpiceJet board has asked the company to take all necessary steps including seeking approval of the civil aviation ministry for the transfer of the ownership and management of the airline, the carrier said in a statement to the stock exchanges.

"We think whatever relief is required in the larger interest of preserving the airline would be forthcoming from the government and the regulator," Sun Group CFO SL Narayanan told the ET NOW television network.

Loss-making SpiceJet employs around 5,000 people and operates 230 flights a day in a market where demand for air travel is rising rapidly but making a profit has proven difficult for most major airlines.

Indian carriers, most of whom are loss-making, have struggled with high operating costs, including fuel, and fierce competition that has limited fare increases.