DELHI- In a move aimed at bolstering its financial position, budget airline SpiceJet (SG) has announced that its CEO and Promoter, Ajay Singh, will inject Rs 500 crore into the company.
The decision to infuse capital was made during a board of directors meeting on July 12. Further, the airline seeks to raise fresh funds amidst ongoing financial struggles and legal disputes.
SpiceJet Ajay Singh to Infuse 500 Crores Funds
Singh’s offer entails the issuance of fresh equity shares and/or convertible securities/equity share warrants on a preferential basis, according to a statement released by the airline.
This infusion of funds is expected to strengthen SpiceJet’s financial standing significantly. Subsequently, demonstrates a strong vote of confidence in the company’s future and long-term viability.
Moreover, this capital injection will make SpiceJet eligible for additional credit facilities of Rs 206 crore under the government’s emergency credit line guarantee scheme (ECLGS).
SpiceJet revealed that it has already utilized $50 million from the ECLGS funds it previously received and its own cash reserves to revive its grounded aircraft.
So far, two aircraft—a Boeing 737 and a Q400—have been brought back into operation. Subsequently, the airline says more planes are expected to rejoin the fleet in the near future.
Singh expressed his optimism about the investment. He stated that it will enable SpiceJet to accelerate its growth plans, seize new market opportunities, and drive revenue and profit growth.
He emphasized the airline’s commitment to building a sustainable and profitable business, highlighting that the capital infusion reflects that commitment.
This announcement is crucial for SpiceJet, as the airline faces legal disputes alongside its financial challenges.
On July 7, the Supreme Court directed the airline to pay the entire arbitral amount of Rs 380 crore to former promoter Kalanithi Maran, adding to the company’s financial burdens.
The COVID-19 pandemic dealt a severe blow to the aviation industry. Subsequently, SpiceJet has been grappling with substantial losses ever since.
Loses in Financial Sheets
In the first three-quarters of FY23, the airline reported a consolidated net loss of Rs 1,507 crore, with the fourth quarter results yet to be announced.
Further, compounding its difficulties, SpiceJet recently announced a delay in declaring its financial results for the fiscal year 2022-2023 due to the ill health of a key member of its audit committee.
The company’s financial performance in previous years also reflected losses. With consolidated net losses of Rs 302 crore in FY19, Rs 937 crore in FY20, Rs 1,030 crore in FY21, and Rs 1,744 crore in FY22.
Despite these challenges, SpiceJet remains optimistic about its future prospects. Subsequently driven by the infusion of Rs 500 crore and its commitment to sustainable growth and profitability.
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