Budget carrier SpiceJet has announced that its top shareholder, Ajay Singh, will be infusing INR 5 billion ($60.85 million) into the airline to support its recovery and return to full operations. SpiceJet has been struggling financially, with a significant portion of its fleet grounded. The company has faced challenges due to weak quarterly results and fierce competition in the budget airline sector. However, Singh’s investment will provide much-needed funds to restore operations and take advantage of the gap created by the crisis at rival Go First.
SpiceJet has stated that it will issue shares, convertible securities, or share warrants to Singh on a preferential basis. As part of the deal, the airline will also gain access to additional credit facilities worth INR 2.06 billion under the government’s emergency credit line guarantee scheme.
Ajay Singh, who is also the managing director of SpiceJet, currently holds a 50.6% stake in the company. He emphasized that this investment will enable the airline to accelerate its growth plans, seize new opportunities in the market, and boost its revenue and profits.
Earlier this year, SpiceJet had revealed plans to raise fresh capital of $300 million through the issuance of securities to qualified institutional buyers. The airline also converted approximately $100 million in dues to an aircraft lessor into equity.
In addition to financial challenges, SpiceJet is currently engaged in disputes with some lessors who are seeking to de-register the airline’s aircraft and initiate bankruptcy proceedings against it. The company is also involved in a legal battle with a former investor over dues amounting to $46 million.
Furthermore, recent reports have indicated that the Indian aviation watchdog is closely monitoring SpiceJet, although the airline has not received any communication regarding enhanced surveillance from the regulator.
SpiceJet’s shares have declined by around 20% this year, contrasting with the 36% increase witnessed by its rival, IndiGo.
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