SpiceJet board to consider capital raise on Friday amid losses, market share battle

HIGHLIGHTS

• The Ajay Singh-led low-cost airline’s plans to secure funds comes at a time when SpiceJet's cash reserves lessens.
• The airline's board meeting was postponed to February 24.
• Last week, the Supreme Court directed the airline to encash bank guarantee and pay Rs 270 crore to its former promoter Kalanithi Maran

Budget carrier SpiceJet is planning to consider options to raise new funds through the issue of eligible securities to institutional buyers, reported Reuters.

The airline is scheduled to have a board meeting on February 24, where it looks to issue shares on a preferential basis upon conversion of outstanding liabilities into equity shares. 

The Ajay Singh-led low-cost airline’s plans to secure funds comes at a time when SpiceJet's cash reserves have gone down and new entrant Akasa Air is taking a pie of the market share. Meanwhile, Air India, now owned by the Tata Group, has placed orders for a total of 470 planes with Airbus and Boeing.

SpiceJet outperformed competitors in January with a passenger load factor of 91 per cent, which indicates the proportion of available seating capacity that has been occupied by customers.

The airline's board meeting to review the company's financial reports for the December quarter was postponed last week to February 24.

As per the Reuters report, the airline’s losses increased in the third quarter, owing to rising fuel prices and a weakening rupee. The company had last made a profit in December 2021, when the industry was suffering massively by Covid-19 pandemic-caused restrictions.

SpiceJet shares have rebounded strongly from multi-year lows earlier this month, and are now down roughly 3 per cent year to date, compared to a 7 per cent decline in IndiGo's parent company, InterGlobe Aviation.

Last week, the Supreme Court directed the airline to encash bank guarantee and pay Rs 270 crore to its former promoter Kalanithi Maran, reported news agency PTI.

The Supreme Court of India ordered that SpiceJet's 270 crore bank guarantee be cashed immediately and that the 578 crore in unpaid fees from the arbitral judgement be paid to media mogul Kalanithi Maran and his Kal Airways.

Additionally, it ordered the airline to pay Maran and Kal Airways Rs 75 crore within three months in order to cover the interest portion of the arbitral decision.

Also Read: SpiceJet shares surge 13% today amid heavy volumes; here's why