India‘s low-cost carrier SpiceJet said it would raise INR 22.5 billion (USD 269.9 million) through the issue of preferential shares and warrants as the troubled airline seeks to return operations to full capacity after the grounding of about a fourth of its fleet.
The Board of Directors of SpiceJet Ltd. met on December 12 and approved the raising of fresh capital of over INR 2,250 crore (approximately USD 270 million) through the issuance of equity shares to Financial Institutions, FII’s, HNI’s and private investors aimed at fortifying the airline’s financial strength and accelerating its growth trajectory.
The proposed preferential issues comprise of investors like Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, Resonance Opportunities Fund and many more for issuance of equity shares and equity warrants aggregating to over INR 2,250 crore.
From January to November 2023, IndiGo reported 233 instances of aircraft malfunctioning, while SpiceJet reported 44 such cases. Air India reported 52 instances of malfunctioning of aircraft, followed by the now-grounded Go First (22), Akasa Air (20), AirAsia (India) Ltd (15), Vistara (13), Fly Big (5) and BlueDart Aviation (2). In 2022, these airlines had reported 542 instances of malfunctioning of aircraft.
“This is a significant fund raise and it is designed to strengthen SpiceJet’s financial position, enhance operational capabilities, settle outstanding issues and position the airline again for sustained growth in the dynamic aviation sector,” said Ajay Singh, Chairman and Managing Director, SpiceJet. He expressed optimism about the positive impact these developments would have on the airline’s future.
“We are confident that this capital raise will help us achieve our goal of building a world class airline in India. I personally thank all our stakeholders, all those who work for SpiceJet and all those who work with SpiceJet and who have patiently waited for this day. They have allowed us the time and opportunity to overcome a difficult phase in our history, and we are grateful to them,” Singh said.
The Board, in a unanimous decision, considered and approved issuance of equity shares/equity warrants under private placement basis, subject to shareholder and regulatory approvals as may be required, the airline shared in an official statement.
The outlook for 2023 continues to remain positive, stated the airline, with a consistent demand for travel, Jazeera’s stringent cost control and solid balance sheet. New destinations, aircraft and initiatives continue to be on the airline’s radar as it aims to grow further in countries such as Iran, Iraq, Saudi Arabia, and the Eastern European region.
The proposed fund infusion will go a long way in enhancing product presence and market reach of SpiceJet and will provide deep financial foundation, the airline said. The capital raised will be instrumental in funding operational expansion initiatives, including fleet enhancement, route network expansion, and technological advancements, it added.
The airline also declared its financial result. According to the airline, it reduced its net loss to INR 428 crore in Q2 FY2024 as against net loss of INR 835 crore in Q2 FY2023.
Sharing the highlights for the quarter ending September 2023, the airline said, it launched 13 new routes during the quarter. Its passenger RASK increased by 11% due to increase in yield by 8% & load factor by 3%, it shared.
The airline was also able to settle dues with aircraft lessor Castle Lake and repay and close an INR 100 cr loan from City Union Bank.
“The July-September quarter has historically been a challenging period for the aviation industry. This year, the challenges were further compounded by elevated fuel prices, impacting operational costs. SpiceJet, however, has been proactive in implementing cost-saving measures and remains focused on adapting to the dynamic market conditions,” Singh concluded.
