With Rs 3,000-crore fund raise, SpiceJet hopes to ‘restore its reputation’ | Business News
Following its Rs 3,000-crore fund raise through the qualified institutional placement (QIP) route, budget airline SpiceJet on Monday said that with the cash in hand, it is ready to accelerate its fleet expansion and growth. With cash in hand, the airline hopes to “restore” its reputation that has taken a beating over the past couple of years due to severe financial stress hitting operations.
“The fresh capital raised will be instrumental in ungrounding SpiceJet’s fleet, acquiring new aircraft, investing in technology and expanding into new markets. SpiceJet aims to restore its reputation for efficiency and reliability, ensuring passengers have access to improved connectivity and a wider range of travel options,” SpiceJet said Monday.
The QIP, which closed on September 18, was oversubscribed, which SpiceJet sees as a demonstration of investor confidence in the airline’s growth prospects. Apart from the Rs 3,000 raised through the QIP route, the airline said that it will receive another Rs 736 crore from its earlier funding round.
“The QIP attracted a diverse pool of top-tier institutional investors and mutual funds, reaffirming the market’s belief in SpiceJet’s ability to navigate industry challenges and capitalise on the growing demand in the aviation sector,” the airline said.
Investors that participated in the SpiceJet QIP includes Goldman Sachs (Singapore), Morgan Stanley Asia, BNP Paribas Financial Markets ODI, Nomura Singapore Limited ODI, Tata Mutual Fund, Discovery Global Opportunity Ltd, Societe Generale ODI, Authum Investment and Infrastructure Limited, Bandhan Infrastructure Fund, White Oak, Carnelian Bharat Amrikaal Fund, 360 ONE Equal Opportunity Fund, and The Jupiter Global Fund.
“The strong response from investors and institutions is a testament to their faith in SpiceJet’s potential to rapidly scale and become a formidable player in India’s burgeoning aviation market. This fundraise marks a pivotal moment for SpiceJet as we look to scale new heights in the aviation industry,” SpiceJet’s Chairman and Managing Director Ajay Singh said.
While much of the Indian aviation industry charted a strong recovery from the massive hit of the COVID-19 pandemic, SpiceJet stood out as an exception. The airline has been grappling with severe financial distress, hitting its fleet, network, and consequently market share.
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SpiceJet’s domestic market share crashed to a fresh low of 2.3 per cent in August as the low-cost carrier continued to reel under financial stress with a majority of aircraft in its fleet grounded due to various reasons including disputes with lessors and technical issues. SpiceJet had started the year with a domestic market share of 5.6 per cent in January.
SpiceJet currently has an operational fleet of just around 20 aircraft, with almost double that number grounded. The cash-strapped airline has been struggling financially, running into rough weather with aircraft lessors and some airports. The carrier has been irregular in salary payments as well, it is learnt. Given the distress, aviation safety regulator Directorate General of Civil Aviation (DGCA) placed the airline under enhanced surveillance from late August in a bid to ensure safe flight operations.
Apart from fund raise, the airline recently announced a debt restructuring arrangement with lessor Carlyle Aviation, under which the latter will write off over $40 million in lease arrears, and convert another $30 million of debt into equity. The fund raise and this debt restructuring pact have ignited some hope that the airline could get on a path to recovery in the coming months.
© The Indian Express Pvt Ltd
