Indian low-cost carrier Spicejet has outlined plans for a new share issue after almost halving losses for the three months ended 30 September 2023, the second quarter of its financial year.
The board of the struggling carrier has approved plans for a Rs22.5 billion ($270 million) share issue as it works to further restructure its finances post-pandemic.
SpiceJet managing director Ajay Singh says: ”This is a significant fund raise and it is designed to strengthen SpiceJet’s financial position, enhance operational capabilities, settle outstanding issues and position the airline again for sustained growth in the dynamic aviation sector.
“We are confident that this capital raise will help us achieve our goal of building a world-class airline in India,” he says, adding thanks for the “patience” shown by the airline’s stakeholders, suppliers and staff.
”They have allowed us the time and opportunity to overcome a difficult phase in our history, and we are grateful to them.”
Singh had himself in July invested Rs5 billion into the struggling carrier in return for fresh shares or convertible instruments, part of several restructuring measures the airline has embarked on as it bids to reactivate aircraft grounded earlier this year.
During the second quarter, SpiceJet almost halved operating and net losses to R4.3 billion from R8.4 billion a year ago.
The reduction in losses came despite revenues falling by almost one-fifth, to R17.3 billion, against the same period last year, reflecting reduced flight activity. It did, however, cut its costs by one-quarter over the same period.
”The July-September quarter has historically been a challenging period for the aviation industry,” says Singh. ”This year, the challenges were further compounded by elevated fuel prices, impacting operational costs.
“In the face of these challenges, SpiceJet emphasises its commitment to operational efficiency, customer service, and strategic decision-making to navigate the complexities of the aviation landscape. The airline continues to explore avenues for growth and profitability in the evolving market.”
But SpiceJet did return to profit in the first quarter of the year, helping it to cut operating and net losses over the first half, from Rs16 billion to less than Rs3 billion.
SpiceJet last made a full-year profit in its 2017-18 financial year as it has battled currency issues, the pandemic and now the grounding of a number of its aircraft. In May this year it outlined plans to reactivate 25 grounded aircraft amid talks with lessors.
