In a relief for low-cost carrier SpiceJet, the board of the budget airline on Tuesday approved raising up to ₹3,000 crore through a qualified institutional placement (QIP).
The company informed the stock exchanges that its board has considered and approved raising funds aggregating up to ₹3,000 crore through the issue of shares or other eligible securities to qualified institutional buyers.
Approval of Raising Funds
In December 2023, the SpiceJet board approved raising ₹2,250 crore from 64 entities, including financial institutions, foreign institutional investors, high-net-worth individuals, and private investors through the issuance of equity shares and warrants. In February 2024, the airline said it secured additional funding of ₹316 crore, bringing the total raised through its preferential issue to ₹1,060 crore.
Earnings
Last week, the airline reported its earnings for the December and March quarters after a wait of more than six months. The airline’s consolidated net loss shrank to ₹423.7 crore for the full financial year ended March 2024 from a consolidated net loss of ₹1,513 crore a year ago.
Challenges Faced by SpiceJet
SpiceJet has faced severe financial and legal challenges since the onset of the COVID-19 pandemic, which has directly impacted its fleet size and market share. The airline’s market share has shrunk rapidly over the past five years—to 4% of the domestic aviation market in May 2024 from 5.4% in May 2023 and 14.8% in May 2019. Similarly, the airline’s fleet has also decreased to around 47 aircraft compared to 76 aircraft in 2019, according to data from aircraft tracking website flightradar24.
Other Challenges
SpiceJet has been involved in legal battles over unpaid dues to aircraft lessors, vendors, and suppliers, and faces contempt notices from the Delhi High Court and the National Company Law Tribunal.
Total liabilities for the company at the end of the March quarter stood at ₹11,690.7 crore compared to ₹12,420.2 crore as of December 2023.
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