Debt-laden budget airlines, SpiceJet, has begun the process of raising capital, to the tune of ₹1,500-2,000 crore. A part of the funds have already been raised while options like stake sale to another airline, sale and lease-back of aircraft, sale of assets like available Boeing 777s and fundraising through QIPs are being looked at as other alternatives, said Ajay Singh, Chairman and Managing Director.
He, however, did not say how much stake the promoter and promoter-group would look at off-loading in case a “strategic investor” is brought on-board. The airlines is also tapping into the Extended Credit Linked Guarantee Scheme (ECLGS) of the Centre as an available option, Singh added.
“A detailed report in this regard will soon be presented before the Board,” he said on the sidelines of an Assocham event.
Marred by losses
According to last available reports, the company reported a net loss of ₹1,268 crore for 9M FY22 (April to December) against a revenue from operation to the tune of ₹4,692 crore. It is yet to declare Q4 and year-end numbers following a ransomware attack on its IT systems. Incidentally, the airline has been reporting losses for three-to-four odd years now.
“We started with a dead company and massive liabilities (in 2015) and soon cleared all debts. For 17 straight quarters, we were profitable. However, we got hit by the Boeing crises that impacted sale and leasing back operations which most airlines resort to. We were not receiving aircraft. Then there was Covid and post that, oil prices spiked to never-before levels. The aviation sector was impacted and more so, SpiceJet,” he explained.
According to Singh, settlement is being carried out with debtors too. The budget carrier is in the process of obtaining seven new aircraft from Boeing by end of this calendar year. A total of 200 aircraft orders have already been placed. “We plan to take delivery of at least seven, if not more, by December-end,” he said. SpiceJet’s current operational fleet size is 60.
ATF prices
According to Singh, the Centre needs to work towards bringing down ATF prices. At present, of every ₹100 earned, nearly ₹70-80 is spent on fuel.
“In India, ATF prices are benchmarked on import parity pricing. And then we have excise duty of 11 per cent and VAT. There is no input tax credit. So it’s an unsustainable model when a major part of earnings go to procure fuel,” he said.
The industry, Singh said, is also working with the Centre for “a more equitable pricing mechanism”.