Ajay Singh's SpiceJet, whose board is set to meet on Monday to consider fund raising efforts, is set to receive a much-needed lifeline. Two 'big investors' are likely to invest more than Rs 1,000 crore in the struggling airline, Times of India reported, citing sources. One investor is expected to inject around Rs 1,000-1,200 crore, while the other may contribute up to Rs 300 crore, the report said.
In a communication to the BSE stock exchange had said that its "board in its meeting scheduled on December 11, 2023 (Monday) will discuss and consider, inter-alia, options for raising fresh capital through issue of equity shares and/or convertible securities on preferential basis." This has lifted the stock price of the airline by nearly 18% in one week.
The airline has been grappling with a cash crunch, resulting in only a portion of its fleet being operational. The airline's plan to secure funds comes as creditors intensify pressure.
However, previous attempts to secure funding were unsuccessful due to a lack of investor interest. SpiceJet has been grappling with a cash crunch for several quarters and is currently facing multiple court cases related to outstanding debts owed to Maran, financial services firm Credit Suisse, and lessors. The airline has incurred significant losses in recent years, with a net loss of Rs 1,513 crore in 2022-23 and Rs 1,744 crore in 2021-22. However, in the first quarter of the current fiscal year, SpiceJet managed to generate a net profit of Rs 197.6 crore.
Recently, a SpiceJet aircraft was seized and grounded in Dubai due to litigation. However, the aircraft was later released following an order of the Dubai International Financial Centre (DIFC) Court. "In a DIFC Court hearing on December 7, the Order was discharged in favour of SpiceJet," SpiceJet said in a statement.
"Additionally, the Judge has directed an inquiry into losses suffered by SpiceJet as a result of the order having been made. The Court has further ordered to pay towards the legal costs incurred by SpiceJet," the airline said.