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SpiceJet open to selling more shares: CMD

Low-cost carrier SpiceJet is open to selling more shares to reduce its liabilities, CMD Ajay Singh said.

“We are flexible. We will talk to our partners and see what it is they prefer to do. But, irrespective, we need to deleverage our balance sheet to have the space to grow, and that’s what we are trying to do,” Singh said in response to a query at the CAPA India Aviation Summit.

At the end of the December quarter, when it posted a four-fold jump in net profit to INR 106.8 crore thanks to robust demand and higher fares, the Gurugram-based airline had liabilities of around ₹14,000 crore.

The carrier has been in talks with lessors, investors and lenders in India and abroad for renegotiating contracts, raising funds, and restructuring. The airline has convinced Carlyle Aviation, its largest lessor from which it has leased 13 aircraft, to convert USD 100 million of outstanding dues into a 7.5% equity and USD 65.5 million worth of compulsorily convertible debentures in the cargo unit.

“The cargo entity (SpiceXpress) will start operating as a separate entity from 1 April. We have a bunch of people to whom SpiceJet owed money to. Because, of course, during covid, airlines had these assets for which they had to pay leases and were not paid. So, all this liability built up. So, we used this cargo unit to help us pay those by getting some creditors to convert into equity in the unit,” Singh said.

According to Singh, apart from the impact of covid, the grounding of the Boeing Max fleet in March 2019 after two fatal crashes involving the aircraft type was a bigger disaster and derailed SpiceJet.

“This was a bigger disaster than covid for us, and we are still on the path to recovery as a consequence of that. When the first aircraft crashed, we were told that, look, it must have been a pilot error, and while the matter was still being investigated, the second crash had happened. At that point, we were told that it was a 15-day affair. It is a small fix, and we will be flying again from 1 April (2019). We never imagined that that could take more than two years,” Singh said.

The airline had placed a firm order of 155 Boeing 737 Max aircraft in January 2017, with options to buy another 55. Currently, its total fleet of 65 planes has only 12 Max planes, as the airline faces difficulties in accessing funds to take delivery of new aircraft, two people aware of the development said.

 

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