SpiceJet Q2 losses narrow to ₹428 cr; airline to raise ₹2,250 cr

The board of directors of cash-strapped airline SpiceJet Ltd. has approved the raising of fresh capital of over ₹2,250 crore via the issuance of equity shares on a private placement basis to financial institutions, foreign institutional investor (FII)’s, HNI’s (high net worth individuals) and private investors. With this funding, SpiceJet aims to boost its finances.

The proposed preferential issues comprise 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 ₹2,250 crore.

Total number of securities proposed to be issued are up to 32,08,05,972 of ₹10 each, while up to up to 13,00,00,000 warrants will be convertible at the option of investor into equivalent number of equity shares of ₹10 each. The issue price has been fixed at ₹50 apiece.

The funds are aimed at enhancing the aviation company’s “product presence” and market reach, says the company. The capital raised will help it expand its fleet, route network, and technological advancements.

“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. Singh says the capital raise will help it achieve goal of building a “world class airline” in India.

SpiceJet's Q2 FY24 losses reduced to ₹428 crore in Q2 FY2024 against ₹835 crore net loss in Q2 FY2023.

On the quarterly result, Ajay Singh says 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," he says.

He says the fresh infusion of over ₹2,250 crore in the company will bring "renewed energy" to adapt to the changing circumstances. For the quarter ending September 2023, SpiceJet says it launched 13 new routes and its Passenger RASK increased 11% due to increase in yield by 8% & load factor by 3%. The quarter also saw the company initiating phased infusion of fresh capital by the promoter at ₹500 crore, of which ₹200 crore already received by the company.

SpiceJet shares closed 4.9% down at ₹57.6 on the BSE today. The shares opened gap up and surged to intra-day high of ₹63.49 but later settled at ₹57.60. At the current share price, the m-cap of the company stands at ₹3,940.65 crore.

Since the start of the lockdown in March 2020, SpiceJet has been struggling to maintain a strong cash position and balance sheet. The recent bankruptcy filing by rival GoFirst also threw the spotlight yet again on it, with many convinced it may be next in line. But the airline's chairman and managing director Singh has so far proved his skeptics wrong.