In a crucial move to address its severe financial challenges, SpiceJet’s board of directors has given the green light to raise fresh capital amounting to over Rs 2,250 crore ($270 million).
This financial infusion comes at a critical time for the airline, which has been grappling with difficulties in meeting employee salaries, statutory dues, and obligations to various stakeholders for several months.
The truncated schedule operated by SpiceJet has also suffered in terms of on-time performance due to the financial crunch.
New Investors Emerge as Saviors
The proposed preferential issues include contributions from prominent investors such as Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, Resonance Opportunities Fund, and others.
The funds raised through the issuance of equity shares and equity warrants are expected to provide the beleaguered airline with the necessary resources to address its financial woes and foster growth.
SpiceJet’s Optimistic Outlook
Ajay Singh, the Chairman and Managing Director of SpiceJet, expressed optimism about the significant fundraising, highlighting its potential to strengthen the airline’s financial position and enhance operational capabilities.
Singh affirmed that the capital infusion would help resolve outstanding issues, positioning SpiceJet for sustained growth in the ever-evolving aviation sector.
Singh conveyed his gratitude to stakeholders, employees, and partners who have patiently supported the airline during challenging times. He emphasized their contribution in allowing SpiceJet the time and opportunity to overcome a difficult phase in its history.
Financial Performance and Outlook
SpiceJet reported a reduction in its Q2 FY 2024 losses compared to the same period last year, with a decline from Rs 835 crore to Rs 428 crore. This improvement signifies progress amidst the financial turmoil.
The airline intends to utilize the fresh capital for various purposes including:
- Debt Reduction: Settling outstanding payments to employees, vendors, and regulatory bodies.
- Operational Enhancement: Improving fleet efficiency, upgrading infrastructure, and enhancing on-time performance.
- Expansion Plans: Exploring new routes and potentially adding aircraft to its fleet.
Unanimous Board Decision
The board of directors, in a unanimous decision during the meeting held on December 12, approved the issuance of equity shares/equity warrants under a private placement basis. This move is contingent upon obtaining necessary shareholder and regulatory approvals.
As SpiceJet navigates these critical steps, the airline aims to emerge stronger and reposition itself as a world-class airline in India. The unfolding developments signal a potential turning point for SpiceJet, offering renewed hope for the airline’s stakeholders and the broader aviation industry.