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SpiceJet board to discuss fund raising options on Wednesday

SpiceJet needs an immediate cash infusion as the airline has been piling up dues having delayed payment to vendors and others. (Photo: Mint)Premium
SpiceJet needs an immediate cash infusion as the airline has been piling up dues having delayed payment to vendors and others. (Photo: Mint)

  • SpiceJet Limited is likely to report a consolidated loss of 96.70 crore and revenue of about 1,950 crore for the March ended quarter, according to estimates complied by Bloomberg. The airline will report its March quarter and full year results for FY21 on Wednesday

NEW DELHI: The board of directors of no-frills carrier SpiceJet Limited will meet on Wednesday to discuss various options of raising fresh capital, the airline said in a stock exchange notificatio.

"This is to inform you that that the Board of Directors of the Company in its meeting scheduled on Wednesday, the 30th day of June, 2021, will discuss and consider, interalia, options for raising fresh capital through issue of equity shares/debt instrument on preferential/qualified institutions placement basis....," the airline said.

The fund raising comes amid the coronavirus pandemic that has had an adverse impact on airlines' operations.

IndiGo and GoAir (now Go First) have set their fund-raising plans on motion.

According to aviation consultancy firm Capa India, Indian airlines are likely to register a consolidated loss of about $4.1 billion during FY2022, taking combined losses over FY2021 and FY2022 to about $8 billion. Many airline operators will struggle to recover from two consecutive years of massive losses.

The board of directors of InterGlobe Aviation Limited, which operates the country's largest domestic airline IndiGo, had in May approved raising up to 3,000 crore through a qualified institutional placement (QIP) process.

Go First plans to raise up to 3,600 crore through an initial public offering before the end of the year, according to a draft red herring prospectus (DRHP) filed by the airline with the Securities Exchange Board of India (Sebi) in May.

SpiceJet Limited is likely to report a consolidated loss of 96.70 crore and revenue of about 1,950 crore for the March ended quarter, according to estimates complied by Bloomberg. The airline will report its March quarter and full year results for FY21 on Wednesday.

When contacted, a SpiceJet spokesperson didn't comment on the fundraising being considered by the airline for shoring up the liquidity at the company.

SpiceJet needs an immediate cash infusion as the airline has been piling up dues having delayed payment to vendors and others, said an analyst tracking the aviation sector for a foreign brokerage who spoke under the condition of anonymity.

"Among the various options available are QIP, raising debt (though the airline is asset-light), capital infusion from promoters," the person added.

Indian airlines have taken a substantial hit following the pandemic which has severely curtailed travel.

According to a recent research report by HSBC Global Research, recovery of air passenger traffic could be delayed by at least 9-12 months due to the second wave of covid-19.

"Although the vaccination program could boost demand a little, (but) the COVID-19 spread is far wider this year. The recovery last year was much stronger in tier-2 and tier-3 cities since the impact of COVID-19 was less there but the impact this year is much more severe across India," HSBC said adding that it expects 80 million domestic passengers in FY2022, down 44% from pre covid levels (FY2020).

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