SpiceJet to carve out SpiceXpress as separate unit

India-based SpiceJet intends to spin off its cargo unit and is seeking shareholder consent to transfer its entire logistics business to SpiceXpress. The airline is also seeking approval to enter into transactions with SpiceXpress after the transfer for transportation services, ground handling and management services, and to transfer or dispose of shares in SpiceXpress after the transfer to other investors, according to an Aug. 17 regulatory filing. [caption id="attachment_416433" align="alignright" width="560"] SpiceXpress currently operates five 737 freighters. (Photo/Changi Airport Group)[/caption] SpiceXpress will acquire the business for around 25.6 billion rupees ($344 million) and operate as a separate entity on or around Oct. 1, 2021, according to the filing. SpiceJet had already passed a special resolution in December 2020 for the transfer to SpiceXpress, then a wholly-owned subsidiary. The company subsequently implemented a scheme allowing for employees in the cargo business to gain shares in SpiceXpress. The transfer of the cargo business to SpiceXpress, which is no longer 100% owned by SpiceJet, thus necessitates fresh shareholder approval. Several other airlines are also separating their freighter-operating divisions from the passenger business. Turkish Airlines announced earlier this year that it will restructure Turkish Cargo as an independent unit, while China Southern’s cargo division recently obtained its own air operator certificate. “Carving out an airline’s cargo division into a separate entity really only makes sense when you want to bring outside investors into the mix,” said Frederic Horst, managing director of Cargo Facts Consulting. “Otherwise, it creates a lot of additional complexity: which systems and functions should be shared and which are separate. It affects all areas of the company — maintenance contracts, crew planning, building leases, traffic rights, to name a few.” Horst said that the biggest question always concerns the separate company’s access to belly space with the passenger airline. “The sticking point is always determining a fair price for the belly capacity,” he said. “Everything else is easy to resolve, but that is one that invariably leads to conflict — particularly when you bring in outside investors.” Access to external funding could lead to fleet expansion, among other things. SpiceXpress CEO Sanjiv Gupta said at Cargo Facts Asia earlier this year that the carrier is hungry for more freighters as the region’s e-commerce market continues to grow. SpiceXpress’s revenue for the second quarter of 2021 increased by 285% year on year, according to a release. In addition to its own five 737 freighters, the carrier has reconfigured multiple Q400s and used capacity on reconfigured A330s, A340s and 767s from Hi Fly and EuroAtlantic Airways. China’s two other major carriers, Air China and China Eastern, have also split their cargo units off into separate but affiliated entities. Standalone subsidiaries have been more common with Europe’s combination carriers including IAG Cargo and Lufthansa Cargo. Other operators, meanwhile, have moved in the opposite direction. Singapore Airlines took the decision in 2001 to spin out its formidable air cargo division, which at the time was on track to operate a seventeen-unit 747-400F fleet. The Global Recession later took a toll on the airline’s air cargo business and in 2017, Singapore Airlines began the process of re-integrating its then wholly-owned subsidiary, SIA Cargo, back into the parent airline. Today, the cargo arm of Singapore Airlines operates as a division within the airline group and continues to operate seven 747-400Fs. Cargo Facts Symposium, taking place LIVE October 25-27 at the Wynn Las Vegas, is the essential event for stakeholders in the air cargo industry. Learn more and register at www.cargofactssymposium.com .

SpiceJet to carve out SpiceXpress as separate unit

Combination carriers perpetuate age-old question of what to do with freighter divisions

Capacity-constrained carriers report cargo growth in July 2021

WTO says record global trade in goods might be nearing a peak

WTO says record global trade in goods might be nearing a peak

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password