SpiceJet is in talks with potential investors for a likely stake sale in the the airline, according to a senior airline executive.
“There are discussions going on because we need to raise capital at this point of time. We are speaking to various stakeholders who have interest,” said the official.
The person, however, didn’t comment on the percentage of stake sale.
“It is too early to say because it all depends on the valuation,” he said.
The person dismissed reports of a Gulf carrier and an Indian conglomerate being among those entities in talks with the airline as “speculative”.
“Gulf carriers have got problems of their own,” says Mark D Martin MRAeS, CEO of Martin Consulting. “They have also just come out of the lockdown and are getting their operations in order and have their own challenges and for them to make an M&A at the moment is not likely going to happen. Someone like Rakesh Jhunjhunwala, who is among the promoters of Akasa Air, could look at buying the airline. This will allow Akasa to get airport slots, fly international from day one and gets engineers and pilots because it is the same fleet.”
SpiceJet’s promoter Ajay Sigh and his family hold 59.40% shares in the airline. The balance is public shareholding, including through individuals with nominal share capital of either up to ₹2 lakh (25.86%) or in excess of ₹2 lakh (8.93%.
“The company continues to be in discussions with various investors to secure sustainable financing and will make appropriate disclosures in accordance with applicable regulations,” the airline’s spokesperson said.
The airline is exploring multiple ways to raise funds and has engaged Ernst and Young for the job. SpiceJet also plans to hive off its cargo arm- SpiceXpress which was valued in August last year at ₹2,555.77 crore.
The aviation safety regulator, DGCA, last week ordered the airline to cut its flight capacity to 50% of what it had approved for the summer schedule after it served a show-cause notice on the airline for safety-related incidents mid-flight as well as the airline’s ‘failure’ to maintain aircraft due to problems with supply of spare parts from vendors because of delayed payments. The airline’s pilots are also unhappy over continued pay-cuts that were introduced due to the impact of COVID-19 on travel demand.
The airline is yet to declare its financial results for fiscal 2021-2022. It incurred a net loss of ₹1,248 crore for the April-December period of financial year (FY) 2022. In FY 2021, it reported a net loss of ₹998 crore and in FY 2020 a net loss of ₹934 crore.
