SpiceJet, an Indian low-cost airline, announced on Wednesday that its largest stakeholder Ajay Singh would invest USD 60.85 million in the company as it seeks to resume full operations.
With a quarter of its fleet grounded due to a run of disappointing quarterly results and intense competition in the market, SpiceJet has been urgently trying to raise money and get the remainder of its fleet back in the air. The infusion of cash also occurs at a time when inexpensive Indian airlines are attempting to fill the gap left by crisis-hit rival Go First.
According to SpiceJet, Singh will have preference when receiving shares, convertible securities, or share warrants. Through the agreement, the airline would also have access to additional financial facilities totaling Rs. 206 crore through the government’s emergency credit line guarantee programme. According to exchange records, Singh, who is also SpiceJet’s managing director, owns a share in the firm worth 50.6%.
In a press release, Singh stated that the investment “will enable the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits.” SpiceJet announced plans to issue securities in order to generate $300 million in new capital in February of this year. It changed a debt of around $100 million USD into equity for an aircraft lessor.
Additionally, SpiceJet is fighting against several lessors who want to deregister the airline’s planes and file for bankruptcy. It is also engaged in a legal battle with a former investor over unpaid debts of USD 46 million. Media sources from late Tuesday stated that India’s aviation body had “enhanced surveillance” of the carrier. The airline claimed that it had not received any such correspondence from the authority. Shares of SpiceJet have fallen almost 20% so far this year, while IndiGo, a competitor, has increased by 36%.