NEW DELHI: Amid stake sale rumours, debt-laden carrier SpiceJet said it continues to be in talks with various investors to secure sustainable financing.
“We will make appropriate disclosures in accordance with applicable regulations,” said a SpiceJet spokesperson on Wednesday.
As per reports, promoter Ajay Singh who owns nearly 60% stake in the airline of which about 44% is pledged or otherwise encumbered, has been approached by a ‘big Middle Eastern airline’ and a big Indian business conglomerate for a stake in the airline.
SpiceJet has not commented on the matter if they have been approached by the two aforementioned parties.
“It is of utmost importance for SpiceJet to raise fresh capital to survive the current headwinds. Financially it is the weakest airline as neither it has the backing of big business houses like Tata Group or Wadia Group nor it has the cash reserve of IndiGo,” said a senior aviation analyst requesting anonymity.
Will Ajay Singh be able to manoeuvre SpiceJet?
He added that without adequate cash, Singh is unlikely to manoeuvre SpiceJet from crisis this time the way he did in 2015 when Kalanithi Maran of Sun Group handed over the airline back to Singh.
At the end of Q3FY22, the company had negative retained earnings of Rs 5,453.4 crore and a negative net worth of Rs 3,830.7 crore.
Its current liabilities had exceeded current assets by Rs 6,344.1 crore. SpiceJet’s financial auditors have time and again raised concerns over its ability to remain a going concern.
Currently, SpiceJet’s financial woes are showing no signs of improvement.
Aircraft leasing companies have started rushing to reclaim their aircraft, which were leased to SpiceJet over non-payment of dues. Then the airline is unable to meet its HR commitments.
To this date, it hasn’t restored pilot salaries to the pre-covid level and is yet to give Form 16 to its employees for the financial year 2021-22.
Besides rising fuel prices, subdued traffic and increasing competition, SpiceJet aircraft faced numerous technical glitches mid-air in June and early July.
This prompted aviation regulator DGCA to restrict SpiceJet’s flights to 50% of departures approved under the summer schedule.
Despite the financial constraints, shares of SpiceJet soared 12% on Wednesday. In the past 5 trading sessions, it is up by nearly 40%.
The surge escalated when SpiceJet said that it has cleared all outstanding principal dues of the Airports Authority of India (AAI) and it no longer remains on ‘cash and carry' at AAI-run airports.