SpiceJet's promoter, Ajay Singh, is reportedly in discussions with global private credit funds to secure up to $100 million, according to a report by MoneyControl. The funds would be directed towards refinancing a portion of promoter debt and potentially inject fresh equity into the financially-strained airline.
The talks are in the early stages and are focusing on loan pricing for a potential structured credit transaction.
SpiceJet's urgent need for cash infusion reportedly stems from legal cases and non-payment of dues, including issues with former promoters and aircraft lessors. The airline faces challenges such as legal cases from lessors and non-payment of dues to former promoters, highlighting its need for financial support. In July, Ajay Singh had committed to infusing Rs 500 crore through fresh equity shares or convertible instruments.
Ajay Singh holds 56.5 per cent stake in the company, out of which 37.9 per cent has been pledged with various lenders. Earlier this month, Singh had also been summoned to the Delhi High Court and was ordered to make a payment to its former owner Kalanithi Maran, over money owed. Maran's legal team claimed that SpiceJet owed them Rs 440 crore in interest arising from the arbitral award and that the airline had only paid them Rs 100 crore of the Rs 380 crore it had been ordered to. In response, SpiceJet told the Delhi High Court that it was "struggling to stay afloat" following the HC's payment order.
Despite the recent financial constraints, the low-cost carrier reported a net profit of Rs 204.56 crore in the first quarter of the ongoing financial year (Q1FY24). This marked a turnaround from the net loss of Rs 788.83 crore in the same quarter last financial year. Moreover, with GoFirst's exit from the aviation market, coupled with the profitability of India's aviation sector, may improve SpiceJet's prospects to repay its debt.
Capa, an aviation consultancy firm, also projects domestic and international passenger traffic to reach around 155 million and 70 million, respectively, for the current financial year, with passenger yields expected to be approximately 3 per cent lower year-on-year.
