New Delhi: Low-cost carrier SpiceJet on Thursday said that it has secured an additional ₹316 crore in funding, bringing the total raised through its preferential issue to ₹1,060 crore.
The funding, which comes amid a severe cash crunch, will allow the struggling airline to pursue expansion plans.
The budget carrier had to lay off about 15% of its staff, or about 1,500 employees, following a two-thirds reduction in its fleet size for want of funds. The airline expects to save around ₹100 crore per year from these measures.
“With this additional funding, we are well-equipped to pursue our expansion plans and enhance our operational capabilities…It has broadened our perspective on the potential opportunities ahead,” said Ajay Singh, chairman and managing director, SpiceJet, in a statement.
The pandemic dealt a severe blow to SpiceJet, eroding its domestic market share from 16.5% in December 2019 to 5.6% in December 2023. The airline’s net fleet size has dropped to 41 aircraft from 120 aircraft in 2019. Of these, about 10 are in wet lease, meaning aircraft leased along with pilots and cabin crew.
Additionally, it has seen its losses widen, from ₹302 crore in FY19 to ₹1,513 crore in FY23. The airline is also embroiled in numerous legal disputes with creditors over unpaid bills.
On 21 February, the airline’s board of directors preferential allotment committee approved the issuance of 40.1 million equity shares to two investors on a preferential basis. Of these, Aries Opportunities Fund Ltd was allocated 40 million shares, and Payal Nitin Magiya received 100,000 shares.
The committee also sanctioned the allotment of 23.1 million warrants convertible into an equal number of equity shares to four investors. This includes 6.3 million warrants to Elara India Opportunities Fund Ltd, 5.0 million warrants each to Jyoti Gupta and Mayur Gupta, and 6.8 million warrants to Arunim Purkayastha.
In January, SpiceJet had received in-principle approval from the BSE to raise ₹2,242 crore by issuing shares and warrants convertible into equities on a preferential basis.
The airline had earlier said it plans to use the funds to reduce liabilities accumulated during the pandemic and also to clear statutory liabilities. It recently completed a capital infusion aggregating to ₹744 crore by allotting shares and warrants on a preferential basis.
Last week, SpiceJet’s Singh along with Busy Bee Aviation Private Ltd jointly bid for bankrupt Go First airline.
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Published: 22 Feb 2024, 03:00 PM IST