 "Ajay, Ajay Singh, spicejet")
Chairman and Managing Director Ajay Singh, SpiceJet
The capital raise is intended to address the airline’s critical need for cash to maintain operations. The company plans to issue new shares to investors to expand its capital base, with ICICI Securities and JM Financial appointed to manage the process. Singh’s stake is also expected to increase by 9 per cent later this year, contingent on his conversion of warrants into equity shares, which would require a payment of around Rs 300 crore.
SpiceJet’s challenges in fundraising, liabilities
Additionally, SpiceJet’s market share has plummeted to below 4 per cent, with only 22 operational aircraft out of more than 50 in its fleet due to the unavailability of engines and spare parts.
Financial turbulence continues at SpiceJet
The airline has also delayed employee salaries and defaulted on provident fund contributions, though it claims that 95 per cent of its staff received salaries in a phased manner.
Despite these setbacks, an airline official expressed optimism to ET, citing the strong demand for air travel in India and the airline’s low-cost structure as potential draws for investors. SpiceJet’s total liabilities were around Rs 9,000 crore as of March 31, 2023, including Rs 2,700 crore owed to aircraft lessors.
SpiceJet receives approval to raise Rs 2,500 cr
SpiceJet had previously received shareholder approval to raise Rs 2,500 crore through a Qualified Institutional Placement (QIP). Still, the process was stalled due to the impact of the Covid-19 pandemic and subsequent industry challenges. Singh has pointed to a series of unfortunate events, including the grounding of Boeing 737 Max aircraft and the surge in jet fuel prices, as major contributors to the airline’s financial woes.
As SpiceJet seeks to secure new funding, its future hinges on its ability to stabilise operations and regain investor confidence in the highly competitive Indian aviation market.
On Tuesday shares of Spicejet closed trading at Rs 56.44, dropping by 8.67 per cent.
First Published: Aug 14 2024 | 10:12 AM IST
