SpiceJet promoter Ajay Singh is reportedly considering selling over 10% of his stake in the airline to raise funds.
SpiceJet is facing severe financial, legal, and operational challenges, prompting promoter Ajay Singh to consider offloading up to 15% of his stake to raise funds as part of a plan to address defaults, bring grounded aircraft back into operation, and stabilize the struggling airline.
The budget carrier SpiceJet is facing several challenges, including financial difficulties, legal issues, and aircraft groundings, as it seeks to raise funds to meet its obligations. The airline has defaulted on payments to vendors, including aircraft lessors. SpiceJet promoter and chairman Ajay Singh is likely to sell more than a 10 percent stake in the struggling airline as part of a new funding round expected to conclude by the end of September, according to sources cited by PTI.
SpiceJet is grappling with multiple challenges, including financial difficulties, legal battles, and the grounding of aircraft, as it seeks to raise funds to meet various obligations. The airline has defaulted on payments to vendors, including aircraft lessors, some of whom have filed legal petitions seeking the airline’s bankruptcy.
SpiceJet, which had a fleet of 74 planes in 2019, is currently operating around 20 aircraft.
According to the PTI report, Ajay Singh may offload up to 15 percent of his stake in the airline if conditions are favorable.
As of June 2024, the promoter group held just over a 47 percent stake in the carrier, according to BSE data.
On September 7, the airline announced plans to raise Rs 3,200 crore through QIP, warrants, and capital infusion by the promoter. According to a presentation on the same day, these funds will be used to bring grounded aircraft back into operation, settle liabilities, induct new fleet, and cover other general purposes.
SpiceJet plans to raise Rs 2,500 crore through QIP and an additional Rs 736 crore through previous warrants and promoter infusion, as stated in an investor presentation.
In January, SpiceJet managed to raise only Rs 1,060 crore through preferential issues, falling short of its Rs 2,250 crore funding plan announced in December 2023.
Financial Struggles:
The financially troubled airline reported a 19.65 percent drop in consolidated profit for the June 2024 quarter (Q1 FY25), with profit declining to Rs 158.75 crore compared to Rs 197.58 crore in the same period last year. Additionally, the airline’s revenue from operations decreased by 14.15 percent, falling to Rs 1,646.21 crore in Q1 FY25 from Rs 1,917.43 crore in the corresponding period the previous year."
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