BackSpiceJet seeks to raise more funds as losses widen in Q2
Spicejet management is confident that its business plans and cash flow projections, will allow it to become operationally profitable, and raise funds as necessary to meet its liabilities.
PremiumNew Delhi: SpiceJet Ltd is considering various options to raise funds, including opting for an emergency credit line guarantee scheme (ECLGS) and issuing securities to qualified institutional buyers, as the budget airline looks to stay afloat amid mounting losses.
Since July, it has raised ₹210 crore via ECLGS and plans to raise more funds by the same means. Department of Financial Services had modified the guidelines for ECLGS in October to help India’s aviation sector tide over its cash-flow problems, allowing airlines to borrow up to 100% of outstanding debt, or a maximum of ₹1,500 crore.
In Q2, Spicejet raised ₹60 crore via ECLGS and another ₹150 crore in October. “The company is in discussion with banks to raise additional funds under ECLGS 3.0, as per the circular dated 6 October, and the discussion is in advanced stages," the airline said in its earnings statement.
The board has approved the raising of fresh capital through an issue of securities to qualified institutional buyers, in accordance with law, it added. The airline is also in talks with various investors to renegotiate the payment terms.
The Spicejet management is also confident that its business plans and cash flow projections, will allow it to become operationally profitable, and raise funds as necessary to meet its liabilities.
SpiceJet posted a net loss of ₹833.2 crore in the September quarter, up from a net loss of ₹570.5 crore in the year ago. In the June quarter its net loss was at ₹789 crore.
“The high ATF prices and depreciating rupee continue to be a downer for the industry but the overall outlook for the sector remains positive. Having completed a series of settlements with most of our major partners and the upcoming hive‐off of our cargo and logistics arm, we expect significant improvements in our operating environment," Ajay Singh, chairman and managing director, SpiceJet, said.
The freighter and logistics services were the sole profit-making segments for the company with a profit of ₹21.3 crore in the September quarter. The segment posted a net profit of ₹18.4 crore in the June quarter and a loss of ₹66.1 crore in the September quarter a year ago.
The company’s mainstay air transport services witnessed a loss of ₹849.2 crore in Jul-Sep. The loss in this segment in the same quarter a year ago was ₹495.6 crore. The airline said that it plans to hive off its cargo business by December.
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