Indian budget carrier SpiceJet to get $61 million infusion from top shareholder

BengaluruEdited By: Manas JoshiUpdated: Jul 12, 2023, 09:06 PM IST

Back in November, the salaries of captains were Rs 7 lakhs or $8,463 for 80 hours of flying.
Photograph:(AFP)

Story highlights

The fund infusion for SpiceJet has come at a time when Indian budget carriers are looking to take advantage of the vacuum left by Go First, a crisis-hit rival airline.

The Indian budget carrier SpiceJet said on Wednesday (July 12) that top shareholder Ajay Singh would infuse USD 60.85 million into the airline as it aims to return to full operations.

About a fourth of SpiceJet’s fleet has been grounded amid a string of weak quarterly results and fierce competition in the sector. The airline is scrambling to raise funds.

The fund infusion for SpiceJet has come at a time when Indian budget carriers are looking to take advantage of the vacuum left by Go First, a crisis-hit rival airline.

SpiceJet has said that it will issue shares, convertible securities or share warrants on a preferential basis to Singh. The deal will also open up credit facilities of 2.06 billion rupees (USD 25 million) under the government’s emergency credit line guarantee scheme.

Singh, who is also SpiceJet’s managing director, holds 50.6 per cent stake in the company.

“This investment will allow the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits,” Singh said in a press release.

In February this year, SpiceJet had announced plans to raise fresh capital of USD 300 million through issue of securities. It converted about USD 100 million in due into equity to an aircraft lessor.

Battle on many fronts

SpiceJet is also fighting some lessors. These lessors are seeking to de-register their aircraft and also to initiate bankruptcy proceedings against the airline. SpiceJet is also entagled in a legal battle with a former investor for dues that are worth USD 46 million.

Late on Tuesday, media reports also said the airline was under “enhanced surveillance” by India’s aviation watchdog. The airline said it had not received any such communication from the regulator.

SpiceJet shares are down around 20% so far this year, while rival IndiGo is up 36%.

(With inputs from agencies)

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