The airline is in talks with partners to see what they want.
SpiceJet’s attempt to clean its balance sheet could see the airline sell more stakes in the coming days. The budget carrier has had to deal with precarious finances since the onset of the COVID pandemic. And while it posted a profit in the last quarter, frequent controversies regarding payments to stakeholders and other such issues keep adding to its financial woes.
But at the recent CAPA event in Delhi, SpiceJet’s Chairman and MD Ajay Singh spoke about the carrier’s plans to regain control and work towards business growth.
Open to selling more stakes
At the recently held CAPA Aviation Summit in New Delhi, SpiceJet MD Ajay Sing said that he is not opposed to selling more stakes in the airline. He added that the airline is flexible, and conversations with partners are ongoing to see what they want. All this is being done to deleverage the balance sheet and allow more space for the airline to grow.
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From getting millions in loans under the Indian government’s modified Emergency Credit Line Guarantee Scheme (ECLGS) to converting $100 million of outstanding dues into a 7.5% equity for its largest lessor Carlyle Aviation, the airline has been busy trying to find ways to stabilize its finances. It has also leveraged its cargo unit SpiceXpress for this. Mint quotes Singh as saying,
“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.”
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737 MAX controversy was a bigger disaster than COVID
The airline was in a better position before COVID, but trouble began before that with the grounding of the Boeing 737 MAX planes. SpiceJet and Jet Airways were the only two Indian customers of the plane, and Singh opened up about the troubles the airline had to go through during the type’s grounding, calling it a bigger disaster than COVID. He said,
“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.”
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SpiceJet has only just begun to emerge from the shadows of the pandemic. The airline posted a net profit of $13 million for Q3 following a surge in passenger demand and ticket prices but has also had payment-related issues recently.
Two of its 737s were deregistered upon the lessor’s request earlier this month, and it also faces legal action from the engineering subsidiary of flag carrier Turkish Airlines – Turkish Technic, which is suing it for approximately $14.5 million over unpaid invoices.
Hopefully, the airline can find a way out of these issues and restructure its finances for business growth.
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