Cash-strapped Ajay Singh, the promoter of SpiceJet, is in negotiations with a number of parties, including a Middle Eastern airline and a significant Indian conglomerate, for the sale of a stake in the faltering low-cost carrier, which urgently needs recapitalization to continue operations.
The SpiceJet airline management had been disclosing these negotiations to government authorities who were worried about its shaky financial condition, and they have now been confirmed.
“The company continues to be in discussions with various investors to secure sustainable financing”
SpiceJet spokesperson said
“We will make appropriate disclosures in accordance with applicable regulations.” Singh owns almost 60% of the budget airline.
According to airline industry sources, “Singh is in active talks for a potential stake sale with a Middle Eastern carrier who has showed desire to purchase 24 percent stake and a board seat in SpiceJet. A significant Indian company has also contacted Singh about purchasing stock in the airline. We have asked the major Indian conglomerate and Middle Eastern carriers for their opinions and are awaiting them.”
The DGCA has given SpiceJet permission to run half of the flights on its authorised summer flight schedule. Only if the company can demonstrate to the regulator that it has the “sufficient, technical assistance and financial resource to achieve such enlarged capacity” will an expansion in operations be permitted. Money will need to be invested in this.
The classic and figurative “cat with nine lives” is SpiceJet. Ajay Singh founded the airline in 2004–2005 after teaming up with NRI Bhulo Kansagra, who had acquired the once-flying Modiluft from businessman SK Modi in 1999–2000. Based on Modiluft’s licence, SpiceJet launched.
Over the course of its existence, it has changed hands multiple times. Most recently, in 2015, Singh repurchased the airline from Kalanithi Maran when it was about to shut down. Singh led the airline through a comeback in the initial years following the re-acquisition. But first, Covid Demat dealt all airlines a fatal blow. Players with weak financial standing and no support from business conglomerates (like Tata Group backing its airlines) were severely harmed.
After Omicron, traffic started to increase, but as things were getting worse, Russia’s war on Ukraine drove up oil costs.
SpiceJet has not yet sent Form 16 to its staff for the fiscal year 2021–2022. The airline is experiencing dissatisfaction due to the low salaries that are still being paid, despite other airlines starting to restore them. Pilot pay at IndiGo will resume its pre-Covid level on November 1, 2022.
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