By VarunVyas Hebbalalu and Kashish Tandon
BENGALURU (Reuters) -India’s SpiceJet said on Tuesday it would raise 22.50 billion rupees ($270 million) by selling shares and warrants to help revive its grounded planes that continue to weigh on the cash-starved low-cost carrier’s financial results.
Once India’s second-largest airline, SpiceJet has grounded 25 of its jets as it struggles to repay its lessors, who are looking to de-register aircraft, and former owner Kalanidhi Maran, among others.
SpiceJet said it believes the fundraise, the largest of its three this year, will help clear some unpaid dues besides restoring its fleet, which has 91 planes as of June 2023.
However, the amount it is raising would just about cover its total expenses of 21.8 billion rupees in the July-September quarter.
The funds are “too little to revive the organisation,” said Harsh Vardhan, chairman of Starair Consulting.
“There are also no institutional investors or the promoters pushing funds into the company.”
The struggling airline’s cash and cash equivalents rose to 1.90 billion rupees as of end-September, but that was mostly due to fundraises via share sales and loans.
Its net cash from operational activities was a negative 1.57 billion rupees in the six months through September. SpiceJet did not give the equivalent number for the latest quarter.
While the carrier’s net loss roughly halved to 4.32 billion rupees in the quarter, it was mostly due to cost-saving activities bringing down its operating expenses. Revenue fell 30%.
“The results do not inspire confidence,” Vardhan said.
SpiceJet’s grounded fleet has not only weighed on revenue, but also pulled down its market share to 5.4% as of October, from 7.3% last year, with rivals such as Akasa Air and IndiGo benefiting.
The latest fundraise counted investors such as Elara India Opportunities Fund, Aries Opportunities Fund, and Prabhudas Lilladher. ($1 = 83.3490 Indian rupees)
(Reporting by Nandan Mandayam, Varun Vyas, and Kashish Tandon in Bengaluru; Editing by Janane Venkatraman and Savio D’Souza)
