 "Rakesh Gangwal")
Cash-strapped airline company SpiceJet’s shares jumped over 19 per cent on Friday after media reports suggested IndiGo co-founder Rakesh Gangwal might buy a ‘sizeable’ stake in the airline.
Following the reports in ET Now, SpiceJet’s shares ended Friday’s session 19.39 per cent higher at Rs 43.60 on the BSE. The airline’s market capitalisation (mcap) stood at Rs 2,982.85 crore. Queries sent to SpiceJet and Gangwal remained unanswered at the time of going to press.
SpiceJet, which has been facing a cash crunch for several past quarters, is also dealing with multiple court cases over money owed to its lessors — former promoter Kalanithi Maran and financial services firm Credit Suisse.
The 1,483 flights the airline is currently operating per week are 17.5 per cent fewer than it did in the same month last year, according to aviation analytics firm Cirium. Amid continuing troubles, the airline’s share price has fallen from Rs 73 in 2018 to Rs 44 this year. Similarly, its mcap has reduced from Rs 4,264 crore to Rs 2,983 crore in the same period.
The promoter group, including Ajay Singh and his family, and Spice Healthcare, owns a 56.5 per cent stake in SpiceJet, which had a 4.4 per cent share of the domestic aviation market as of September.
Gangwal held 13.23 per cent in IndiGo operator InterGlobe Aviation as of June, according to data provided by stock exchanges. He has been paring his stake in IndiGo following a dispute with co-founder Rahul Bhatia over corporate governance issues.
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In August, InterGlobe Aviation’s promoter, Shobha Gangwal, sold a 3 per cent stake in the company. She had sold a total of 11.52 million shares between Rs 2,441 and Rs 2,427 apiece to mop up Rs 2,802 crore, data provided by stock exchanges showed.
Prior to the stake sale, Gangwal and his family held a 29.72 per cent stake in InterGlobe.
In February this year, the Gangwal family had reduced its stake by a further 4 per cent for around Rs 2,900 crore in a block deal.
In September last year, the Gangwal family had sold about 2.8 per cent through block deals for around Rs 2,000 crore, bringing down its holdings to 33.78 per cent.
One of the founders of IndiGo, Gangwal was the president and chief executive officer of US Airways Group from 1998 until he resigned from the post in 2001. He later served as head of travel technology firm Worldspan Technologies before setting up IndiGo with Bhatia.
SpiceJet had reported a net profit of Rs 197.6 crore for the June quarter of 2023-24 (FY24) after recording a net loss of Rs 6.2 crore on a consolidated basis in the last quarter of FY23 (Q4FY23).
Last month, the airline paid $1.5 million to Swiss company Credit Suisse following a Supreme Court directive.
Credit Suisse and SpiceJet have been embroiled in a legal conflict since 2015 over outstanding debt of about $24 million. In August 2022, both parties informed the Supreme Court they had come to an agreement. In March this year, Credit Suisse initiated a contempt case against Singh and the airline, asserting that they had not honoured their payment obligations as outlined in the settlement terms.
Singh is embroiled in a dispute with Maran. The airline paid Rs 100 crore owed to Maran following the Delhi High Court’s direction on the arbitral award.
This dispute traces its origins back to 2015, when Maran sold his 58.46 per cent stake in SpiceJet for a meagre sum of Rs 2.
In 2016, Maran took the matter to the Delhi High Court, alleging that the airline breached their sale agreement by failing to issue him share warrants and preference shares. In response, the court in 2017 directed the airline to deposit Rs 579 crore and encouraged both parties to resolve the matter through arbitration. In 2018, an arbitration tribunal ruled in Maran’s favour, awarding him Rs 579 crore plus interest.
On May 29 this year, the high court ordered SpiceJet to pay the interest of Rs 380 crore to Maran. On July 7, the Supreme Court rejected SpiceJet’s request for an extension to make this payment to Maran and his company, Kal Airways. On July 10, Kal Airways firmly stated there was no possibility of an “amicable” settlement with SpiceJet and demanded that the airline adhere to the court’s order to pay the interest.
