SpiceJet has finally hived off its cargo arm-SpiceXpress, making it a separate entity. With this transaction, SpiceJet has gained around $310 million and considerably reduced its negative net worth.
“The consideration for the sale will be discharged by SpiceXpress through security issuance in the combination of equity shares and compulsorily convertible debentures to SpiceJet for $310 million, positively impacting its balance sheet,” the airline said.
Unlike its parent carrier, SpiceXpress is a profitable entity. The airline made a net profit of $6.5 million, between April and December 2022.
“SpiceXpress will provide greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth. Both SpiceJet and SpiceXpress have great potential and will complement each other well,” commented Ajay Singh, Chairman and MD, Spicejet.
As an independent entity, SpiceXpress can raise funds on its own. The cargo carrier will see aircraft, trademarks, contracts, and all the rest transferred from the parent carrier.
SpiceJet has been trying to separate its cargo business for quite some time and had received all approvals last year with the transaction expected to be completed by August 2022. SpiceJet has received a financial boost from this transaction as the airline is struggling to rebuild its capacity post-pandemic. The airline is also willing to sell more shares to deleverage the balance sheet and allow more space for the carrier to grow.
SpiceJet posted a net profit of $13 million for Q3 and converted $100 million of outstanding dues into a 7.5% equity for Carlyle Aviation.