Budget airline SpiceJet Ltd would require a war chest of close to $250 million, a committed investor or group of investors with a hunger for high risk and an unwavering sight on the restructuring roadmap to fly out of the turbulence zone, said Kapil Kaul, the CEO of Centre for Asia Pacific Aviation (capa), South Asia. The airline consultancy body believes, without recapitalisation, recovery would not be "realistic."

"We estimate $250 million funding requirement to stabilise operations. (It) will require continuous flow of capital in the near term as market and competitive dynamics will remain challenging," said the head of the airline consultancy and research firm.

The no-frill airline's chief operating officer (COO) Sanjiv Kapoor told dna that it had already begun scouting for investors for recapitalisation and funding losses.

"There is a need for recapitalisation and we are looking for fresh capital," he said.

Spicejet has been on a lookout for investors for quite some time without much success. Sources in the industry confirmed that the airline has been in talks with private equity investors to raise money to fund its turnaround plans.

Kaul said while strategic investors like foreign carriers, who can invest up to 49% in the domestic airlines, may not be keen to infuse funds in the airline, for new investors it would be a high-risk-and-high-reward game.

"Real and sustainable turnaround will bring in high rewards for the investors (in SpiceJet)," said Capa chief.

The airline has fallen in the bracket of high risk because it has been consistently reporting loss for last five quarters. In the September quarter, it reported a loss of Rs 310 crore despite jet fuel prices hovering around the lowest levels in a decade and a favourable foreign exchange that translates into huge cost savings. Domestic airlines have also benefited from improving air traffic numbers, which jumped over 8% in October compared with the same month last year.

What has spooked the market, and could prompt a prospective investor to reconsider plans to invest in the budget airline, is doubts raised by its auditors over the airlines viability. It has also rationalised its capacity.

In such a scenario, Kaul feels it was "critical for Spicejet to turn profitable in the third (December) quarter, especially with lower (aviation turbine fuel) ATF prices."

In Kaul's view the Delhi-based airline's second quarter performance was positive compared with the same quarter last fiscal. However, he said, it wasn't not significant enough to "draw investors or market attention."

"However, positive changes in the front end are visible and encouraging," he said.

Kaul sees Spicejet rationalising or maintaining current capacity levels post recapitalisation and focus on consolidation and recovery.

According to him, the airline will take at least 12-18 months-plus post recapitalisation to show any "measurable recovery."

Kaul said Spicejet's survival and recovery was critical for the industry, which logged a loss of $1.5 billion last year and is expected to lose $1.3 billion this fiscal.