SpiceJet is planning to sell more shares to reduce its liabilities revealed chairman and managing director, Ajay Singh.
Speaking at a recent media event, Singh said: “We are flexible. We will talk to our partners and see what it is they prefer to do. But, irrespective, we need to deleverage our balance sheet to have the space to grow, and that's what we are trying to do.”
The airline has been in financial trouble for a while now and has been in constant talks with lessors, investors and lenders for renegotiating the deals, raising funds and restructuring contracts. The airline received some respite as Carlyle Aviation converted its $100 million outstanding dues into a 7.5% equity and $65.5 million worth of compulsorily convertible debentures in the cargo unit.
"The cargo entity (SpiceXpress) will start operating as a separate entity from April 1, 2023. We have a bunch of people to whom SpiceJet owed money to. Because, of course, during covid, airlines had these assets for which they had to pay leases and were not paid. So, all this liability built up. So, we used this cargo unit to help us pay those by getting some creditors to convert into equity in the unit," Singh added.
Speaking on the grounding of the Boeing Max aircraft and its impact on the airline, Singh said: “This was a bigger disaster than Covid for us, and we are still on the path to recovery as a consequence of that. When the first aircraft crashed, we were told that, look, it must have been a pilot error, and while the matter was still being investigated, the second crash had happened. At that point, we were told that it was a 15-day affair. It is a small fix, and we will be flying again from 1 April (2019). We never imagined that that could take more than two years.”
SpiceJet had placed a firm order of 155 Boeing 737 Max aircraft in January 2017, with options to buy another 55. Currently, its total fleet of 65 planes has only 12 Max aircraft, as the airline faces difficulties in raising funds to take delivery of new aircraft.
Talking about the COVID-19 pandemic impact, Singh assured: “It is in the DNA of SpiceJet. We just refuse to die. During Covid, we were the weaker airline. IndiGo had its reserves. Air India had the government of India, GoAir had the backing of Britannia and Wadias. We chose not to shut down and die," Singh said, adding that the airline aggressively pushed its cargo business during the pandemic. As part of its plan to raise funds to finance growth plans, the company board had also sought shareholders' approval in February 2023 to raise fresh capital of up to $301.9 million through an issue of securities to qualified institutional buyers.”
SpiceJet is due for some tough competition with start-ups like Akasa Air and India One vying for its share in the domestic market along with biggies like Air India and IndiGo.