SpiceJet’s board has granted approval for a fundraising initiative totaling Rs 2,250 crore, involving 64 entities such as financial institutions, foreign institutional investors, high-net-worth individuals, and private investors. This move comes as the airline grapples with financial challenges, including court cases related to outstanding dues to former owner Kalanithi Maran, Credit Suisse, aircraft lessors, and engine lessors.
The airline reported a consolidated net loss of Rs 449.04 crore for the second quarter of 2023-24, marking a 46% year-on-year decline. Chairman and Managing Director Ajay Singh attributed this to historical challenges faced by the aviation industry during the July-September quarter, compounded by elevated fuel prices impacting operational costs.
As part of the fundraising, SpiceJet plans to issue 320 million shares and 130 million warrants to the 64 investors at an issue price of Rs 50 per equity share/warrant. The list of investors includes Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, and Resonance Opportunities Fund.
Ajay Singh expressed confidence that this capital infusion would bolster the airline’s financial position, enhance operational capabilities, and aid in settling outstanding dues. As of Tuesday evening, SpiceJet’s market cap stood at Rs 3,971 crore.
With Ajay Singh and related entities holding 56.53% of SpiceJet shares, the impact on their shareholding after the issuance to 64 entities remains unclear. The airline has pursued various avenues to raise funds, including Rs 449.8 crore under the central government’s emergency credit line guarantee scheme (ECLGS) in 2022-23 and an additional Rs 541.3 crore under ECLGS in 2023-24.
SpiceJet is actively considering a non-binding term sheet from a potential investor for additional capital infusion. The airline currently operates about 1,430 flights per week, representing a 23% reduction compared to the same period last year, according to Cirium.
Despite facing annual losses since 2018-19, SpiceJet has been exploring diverse strategies to address its financial challenges, including recent infusions by Ajay Singh and Carlyle Aviation Partners. Legal conflicts with creditors, lessors, and past owners have also marked the airline’s financial landscape, with ongoing cases involving Credit Suisse and aircraft lessors.
The fundraising initiative aims to provide the necessary financial impetus for SpiceJet to navigate its current challenges and work towards sustained financial stability.
