Spicejet, India’s second-largest low-cost carrier, has been through multiple ups and downs over almost 20 years.
The airline is once similarly working with a mounting debt-load and surging prices after the pandemic.
SpiceJet

- Since the COVID-19 outbreak last year, the airline has constantly defaulted on prices. Earlier this month, an Indian court ordered the winding up of SpiceJet and asked the official liquidator to take over the low-cost airline’s assets in a case connected to non-payment of unpaid dues of around $24 million to Credit Suisse AG.
The airline reportedly failed to pay the payment to the Swiss MRO firm SR Technics for the maintenance and repair of aircraft engines, modules, components, assemblies, and parts under a contract dated November 24, 2011. In 2012, the MRO firm entered into a financing deal with Credit Suisse under which it assigned all its current and future rights to claim charges.
“SpiceJet has obviously had a difficult past and continues to have a challenging present as well,” said Mark D. Martin, CEO of Martin Consulting, an aviation safety firm. “The airline has been out of bankruptcy almost five times - and has been in financial crisis better than any airline in its 17-year existence.
“Unfortunate as it is, SpiceJet has required financial rescue nearly every five years either by an investor, a bank or the supporter has had to raise money themselves in demand to keep the airline afloat."

Change of owner and fortunes
SpiceJet, which nowadays has a negative net worth of around $450 million, was co-founded by Ajay Singh in 2005. Over the next few years, the airline accepted investments from Tata Sons and a private equity firm led by billionaire Wilbur Ross.
The turning point for Spicejet arrived in 2010 when Singh sold a majority stake in the airline to Kalanithi Maran of Sun TV for about $98 million. Directly after Maran’s takeover, Spicejet reported profits in 2010 and 2011 after a decade of losses.
With Maran at the helm, Spicejet aggressively grew its fleet and began flying more routes, using heavy discounts to lure passengers.
Although this strategy had some short-term benefits, Spicejet was bleeding cash and it was fast looking like the airline would be one of the first casualties in an all-out price war that ensued in India’s low-cost trvel space.
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That’s when Singh came to the carrier’s rescue by acquiring a 58 percent equity from Maran in January 2015. “The Marans were strategic investors,” said Martin. “They left the airline to managers to run it like it was managed before, as they felt that was both the smart and mature thing to do.”

Ajay Singh
After Singh’s return, SpiceJet was on the development course also and even signed a $22 billion deal with Boeing for up to 205 Boeing 737 MAX aircraft in 2017. While the grounding of the aircraft stalled the expansion efforts, the airline was about to run into some good fortune.
India’s largest airline
The spectacular collapse of Jet Airways – once India’s largest airline – gave Spicejet the chance to grow its fleet along with allocations at Jet’s Mumbai and Delhi hubs.
“The Indian government has gone out of its way to help and support SpiceJet and, in contrast, has not done much for other Indian carriers,” told an airline industry veteran, who refused to be documented.
“Furthermore, most airline policies that have reached into existence – including the Emergency Credit Line Guarantee Scheme (ECLGS) – have been created all along for the help of SpiceJet. It was so clear that Jet had to be shut down so that SpiceJet could look stronger in the market.”

During the pandemic
The airline was hit particularly hard during the pandemic, especially after the imposition of state-wide lockdowns that decimated domestic travel. Spicejet primarily relied on its cargo unit – SpiceXpress – to cancel some of the failures.
- In its latest quarter, the carrier’s loss widened to $75.5 million, compared to the same period a year earlier, with higher fuel prices hurting margins. SpiceXpress, which reported a 5 percent quarter-on-quarter increase, was the only cheery spot.
Ajay Singh, Chairman and Managing Director, SpiceJet.
“We have made excellent progress in our recovery and I expect this trend to continue forward in the coming quarters,” said Ajay Singh, Chairman and Managing Director, SpiceJet.
“The settlement with key lessors, the return of the 737 MAX in the current quarter, transfer of the logistics business, and some very significant announcements lined up soon are all positive tailwinds that should have a significant impact on our long term plans.”

“The inquiry is, is this the end of the route for SpiceJet?” told Martin. “It does seem very likely unless further capital is infused in by its promoter Ajay Singh and the Boeing Max fleet starts to pay back and help wipe the slate pure of all losses. Despite it pushing itself this far and for this long, SpiceJet has accumulated a tremendous piece of debt.”
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