Relief for SpiceJet? Carlyle likely to convert $100-mn debt into 5% stake in airline

Low-cost carrier SpiceJet is likely to get a much-needed lifeline from one of its biggest lessors, said reports on Thursday. Carlyle Aviation Partners has agreed to convert its outstanding lease rental in SpiceJet into equity. The leasing firm, owned by global private equity giant Carlyle group, has the largest exposure among other lessors, reported Economic Times.

Carlyle is likely to convert its $100-million debt into a 5% stake in the airline, reported CNBC TV18 quoting sources. Carlyle is also likely to convert its dues into convertible debentures in its newly formed logistics arm SpiceXpress.

"If SpiceJet board agrees on debt conversion, SpiceXpress will be valued at over $1 billion," reported CNBC TV18. Carlyle converting its debt into equity will help SpiceJet reduce debt.

The news comes at a time when SpiceJet Ltd board, on Friday, will consider options to raise fresh capital by issuing securities to qualified institutional buyers amid a string of quarterly losses as competition heats up in the aviation industry.

The plan to raise capital comes as SpiceJet's cash reserves dwindle and new entrant Akasa Air jostles for a share of the market while rival Air India ramps up its revamp plans with mammoth orders for new aircraft.

SpiceJet's market share slipped to 7.3% in January from 7.7% in December, while IndiGo retained the lion's share of 56.3%. Akasa grabbed 2.8%, while Air India's share was steady at 9.2%, data from the country's aviation regulator showed.

Spicejet's passenger load factor, which measures the percentage of available seating capacity that has been filled with passengers, outdid rivals at 91% in January.

Last week, SpiceJet postponed its board meeting to approve financial results for the December quarter to February 24.

At the board meeting on Friday, SpiceJet will also consider issuing shares on a preferential basis after converting outstanding liabilities into equity shares. The airline's total equity and liabilities stood at Rs 8,811 crore as at September 30, while cash and cash equivalents were Rs 6.6 crore.

Its losses widened in the September quarter, hit by soaring fuel costs and a depreciating rupee. The company had last turned a profit in the three months that ended in December 2021, when the industry was roiled by pandemic-led curbs.

On Thursday, SpiceJet's stock closed 0.1% lower at Rs 35.40.