SpiceJet exploring stake sale to raise Rs 2,000 cr, says CMD Ajay Singh

SpiceJet is looking to raise investments from external parties, including airlines, said Ajay Singh on the sidelines of an ASSOCHAM event

SpiceJet is exploring multiple options, including a stake sale to other airlines, to raise up to Rs 2,000 crore so that it remains a “strong and vibrant” carrier, its chairman and managing director, Ajay Singh, said on Tuesday.

SpiceJet has been making losses for the last four years. Moreover, it is currently operating less than 50 per cent flights, following the July 27 order of the aviation regulator in the wake of a spate of incidents.

“SpiceJet is exploring options for fundraising. We are doing that by looking at investments from external parties, including other airlines,” Singh said on the sid­e­lines of an event organised by industry body ASSOCHAM. Singh and his family own 59.4 per cent in the  airline, and the remaining is owned by the public. As much as 44.24 per cent of the promoter st­ake was ple­dged to the creditors (YES Bank, IDFC First Bank, and Indian Bank bei­ng the ma­jor ones) as on Ju­ne 30 this year, according to the company filing on the BSE. 

SpiceJet’s market cap on Tuesday was Rs 2,783 crore, according to the BSE. 

Singh said funds were also being raised through the government-supported Emergency Credit Line Guarantee Scheme (ECLGS) and through “sale and leaseback process using our new aircraft that are being delivered by Boeing”.

Under the sale and leaseback process, an airline sells its planes to a lessor and immediately leases them back. The airline then pays a monthly lease amount to the lessor. This process helps the airline in maintaining liquidity.

“We have passed a shareholder resolution saying we will raise up to Rs 2,000 crore. Some of the amount has already been raised,” Singh said.

When asked how much stake would be put up for sale, he replied: “That depends on what offers are available to us. We will do everything in power so that SpiceJet remains a strong and vibrant player.”

On the question of the airline also considering the Qualified Institutional Placement method to raise funds, he replied in affirmative, adding that SpiceJet was looking at all the options.

Singh said the airline would add seven new Boeing 737 Max planes to its fleet by the end of 2022. SpiceJet is currently operating 60 planes to run commercial flights, he added.

SpiceJet incurred net losses of Rs 316 crore, Rs 934 crore, and Rs 998 crore in FY19, FY20, and FY21, respectively.

In the April-December period of 2021, the airline posted a net loss of Rs 1,267 crore. The airline is yet to declare results for the January-March period of 2022.