SpiceJet promoter Ajay Singh likely to offload over 10% stake in airline to raise funds: Report

SpiceJet promoter and chairman Ajay Singh may offload more than 10 percent stake in the struggling carrier as part of the latest funding round that is expected to close by the end of September, PTI reported citing sources.  

Business Today was unable to verify the development independently. 

The budget carrier is grappling with multiple woes, including financial challenges, legal battles and grounding of aircraft aims to raise money to meet various obligations. SpiceJet has defaulted on payments to vendors, including aircraft lessors, some of whom have filed legal petitions seeking the airline’s bankruptcy. 

SpiceJet, which had a fleet of 74 planes in 2019, is currently operating around 20 aircraft.  

Singh could offload up to 15 percent stake in the airline if certain conditions are conducive, the PTI report added. 

At the end of June 2024, the promoter group had a little over 47 percent stake in the carrier, as per data available on the BSE. 

On September 7, the airline said it plans to mop up Rs 3,200 crore through QIP, warrants and capital infusion by the promoter, the airline said in a presentation on September 7. The funds will be utilised to take back the grounded fleet in operations, liability settlement, new fleet induction and other general purposes. 

“Spicejet plans to raise Rs 2,500 crore through QIP and Rs 736 crore through previous warrants and promoter infusion, the airline said in an investor presentation,” it said in the presentation. 

In January, SpiceJet could raise only Rs 1,060 crore through preferential issues against its Rs 2,250 crore funding plan that was announced in December 2023. 

Shaky financials 

The beleaguered airline reported a 19.65 percent drop in consolidated profit for the June 2024 quarter (Q1 FY25). The carrier’s profit came at Rs 158.75 crore in Q1 FY25 as against Rs 197.58 crore in the year-ago period. During Q1 FY25, the airline’s revenue from operations also took a hit and slipped 14.15 percent to Rs 1,646.21 crore from Rs 1,917.43 crore in the corresponding period last year. 

Total liabilities for the company at the end of the March quarter stood at Rs 11,690.7 crore compared to Rs 12,420.2 crore as of December 2023. The airline had also laid off about 1,500 employees, or about 15 percent of its staff, following a two-thirds reduction in its fleet size, for want of funds. 

DGCA action 

In August, the Directorate General of Civil Aviation (DGCA) announced that SpiceJet has been placed under “enhanced surveillance with immediate effect”. This decision has been taken to implement increased spot checks and night surveillance to uphold the safety standards of the airline’s operations. 

DGCA mentioned it conducted a special audit of the airline's engineering facilities on August 7 and 8 and certain deficiencies were found during the special audit.