Wednesday, May 29, 2024

SpiceJet Considers Share Sale To Reduce Liabilities, Says Chairman Ajay Singh

By Staff Correspondent

SpiceJet, the renowned low-fare airline, is gearing up to sell additional shares to alleviate its liabilities, as per Ajay Singh, the chairman and managing director of the company. In a recent speech at the CAPA India Aviation Summit, Singh stated that the company is ready to discuss with its partners to gauge their preferences. However, he emphasized that their top priority is to reduce their liabilities to make way for future growth.

In the last quarter of 2022, SpiceJet saw a four-fold increase in its net profit, amounting to INR 106.8 crore, owing to robust demand and higher fares. Despite this success, the airline currently faces a staggering INR 14,000 crore in liabilities. SpiceJet has been negotiating with lessors, investors, and lenders in India and abroad to renegotiate contracts, raise funds, and restructure.

Singh revealed that the grounding of the Boeing Max fleet in March 2019, following two fatal crashes, had a more significant impact than the COVID-19 pandemic. SpiceJet had ordered 155 Boeing 737 Max aircraft in January 2017, with options to buy an additional 55. However, the airline needs help accessing funds to deliver new aircraft, and its total fleet of 65 planes has only 12 Max planes. In 2019, SpiceJet expanded its fleet by inducting 35 aircraft from Jet Airways, which had stopped its operations in April of the same year.

Despite the current challenges the airline faces, Singh remains resolute and determined. The company’s board has proposed to raise fresh capital of up to INR 2,500 crore or $301.9 million through the issuance of securities to qualified institutional buyers, to support its growth plans. Singh stated that the upcoming quarters would significantly transform SpiceJet’s balance sheet. The company aims to operationalize its current assets and will acquire a substantial number of dedicated cargo aircraft in the coming months.

Singh pointed out that SpiceJet had aggressively pushed its cargo business during the pandemic, and he believes that the demand for air travel will continue to rise. He added that “Demand is tremendous. I think there is still some way to go. You could still increase fares. There is no tapering in sight. Perhaps it is time when these 1.3 billion people are waking up and saying, let’s travel.”

Despite the challenges faced by SpiceJet, the company’s leadership remains committed to its goals and is pursuing innovative solutions to mitigate its liabilities while seizing new growth opportunities.

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