Budget carrier SpiceJet said on Wednesday that top shareholder Ajay Singh would infuse 5 billion rupees ($60.85 million) into the troubled airline as it looks to return to full operations. SpiceJet has been scrambling to raise funds and restore operations for about a fourth of its fleet that has been grounded amid a string of weak quarterly results and fierce competition in the sector. The fund infusion also comes at a time when Indian budget carriers are looking to take advantage of the gap left by crisis-hit rival Go First.
SpiceJet said it will issue shares, convertible securities, or share warrants on a preferential basis to Singh. The deal will also open up further credit facilities of 2.06 billion rupees to the airline under the government's emergency credit line guarantee scheme. Singh, also SpiceJet's managing director, holds a 50.6% stake in the company, as per exchange data. "This investment will allow the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits," Singh said in a press release.
SpiceJet had announced plans in February to raise fresh capital of $300 million from an issue of securities to qualified institutional buyers and converted around $100 million in dues to an aircraft lessor into equity. SpiceJet is also battling some lessors who are seeking to de-register its aircraft and initiate bankruptcy proceedings against the airline. It is also locked in a legal dispute with a former investor for dues worth $46 million.
Late on Tuesday, media reports also said the airline was under "enhanced surveillance" by India's aviation watchdog. The airline said it had not received any such communication from the regulator. SpiceJet shares are down around 20% so far this year, while rival IndiGo is up 36%.
($1 = 82.1664 Indian rupees)