New Delhi: Cash-strapped budget carrier SpiceJet is looking for urgent recapitalization by means of raising funds to the tune of Rs 2,000 crore from external parties through strategic disinvestment of its stakes and assets, as this would help in the smooth functioning of the airline in the coming months.
SpiceJet’s Chairman and Managing Director, Ajay Singh told The Sunday Guardian that SpiceJet’s strategy is to raise resources for the smooth operation of the airline and for this, the company would do everything to ensure that. “SpiceJet is looking to raise Rs 2,000 crore through various means, some of which would be raised through government supported scheme such as the ECLGS (Emergency Credit Line Guarantee Scheme), the sale of some of its aircraft and also through the SLB (Sale and Lease Back) process. The company is also looking to strategically sell a part of its stake to external parties to raise funds,” Ajay Singh told this newspaper.
Asked what percentage of stake the airlines is looking to sell, Singh said that he would not be able to divulge such crucial information at this moment. Singh also refused to answer on the timeline by which the airline was looking to make this disinvestment.
“At this moment, I cannot give you any further details on this. But I can say that we are already in the process and we have already raised some amount of this money. Once it is finalised, we will go to the board and also share with you the details,” Singh told this newspaper.
However, sources aware of this development told this correspondent that the airline is looking to disinvest some 24% of its equity stakes in the coming months and for this, the management of the airline is in talks with some Middle Eastern airline. Sources also further pointed out that the deal for the sale of stake would also entail a seat for the investing enterprise on SpiceJet’s board.
It is also pertinent to mention here that SpiceJet in 2019 had entered into a codeshare agreement with the UAE-based Emirates. However, till now, none of the Middle Eastern airlines, including the Emirates, have made any comments on SpiceJet’s strategic disinvestment of its equity shares.
Over the last few months, SpiceJet has been in the news for all the wrong reasons—the cash-strapped airline was pulled up by the Indian aviation watchdog, the DGCA (Directorate General of Civil Aviation), for failing to demonstrate adequate safety parameters after reports of multiple SpiceJet aircraft reported technical snags and turnarounds during this period.
The DGCA also remarked in June that SpiceJet was practising a “cash and carry” culture and, in turn, hinting that such strain on resources of the airline was affecting the operational capability of SpiceJet. Earlier last month, the DGCA had also asked SpiceJet to scale down its operations to 50% till the airline was able to plug all gaps in its operations. SpiceJet had also got into trouble with its lessors after it failed to repay many of them. However, most of them were settled amicably between the lessor and the airline. SpiceJet, however, did not release its quarter end results for April to June quarter, citing the ransomware attack on its system last month, but is expected to release the same on Monday.