SpiceJet Issues Shares to Lessors to Pay $28 Million in Back Dues

On September 4, 2023, SpiceJet, an Indian low-cost carrier announced that it had given more than 48 million shares to nine lessors to clear outstanding dues of more than $28 million. The airline has been struggling to keep its finances stable and has faced significant financial challenges in recent years, eventually resulting in a dip in its domestic market share.


According to Reuters, the airline’s shareholders met and passed many resolutions that also included a fundraiser for a little over $300 million and a preferential issue of shares to lessors to clear a significant chunk of dues. The airline’s lessors who have received the shares include SASOF III (A13) Aviation Ireland DAC, SASOF III (A6) Aviation Ireland DAC, SASOF III (C) Aviation Ireland DAC, SASOF III (E) Aviation Ireland DAC, SASOF III (A19) Aviation Ireland DAC, and SASOF II (J) Aviation Ireland DAC Citrine Aircraft Leasing Limited, among others.


Various media reports over the last few months suggest that SpiceJet is struggling financially and finding it increasingly difficult to clear necessary dues. Recently, it had to tell an Indian court that it was "struggling to stay afloat" after the carrier was ordered to make payment to its former owner². The issue relates to an arbitration case, which SpiceJet lost in 2018. It involved the transfer of shares from former owner Kalanithi Maran to the company's new management in 2015. As a result, the airline was liable to pay $70 million plus interest. But Maran has not received full payment and approached the courts, saying he was still owed $48 million.

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This is also not the first time the carrier has considered parting with shares to settle dues. In March, SpiceJet MD Ajay Singh said he is not opposed to selling more shares in the airline. He added that the carrier is flexible, and conversations with partners were ongoing to see what they wanted. Earlier in the year, it was reported that SpiceJet converted $100 million of outstanding dues into a 7.5% equity for its largest lessor, Carlyle Aviation. This move by SpiceJet is an attempt to stabilize its finances and return to full operations. It remains to be seen how successful this strategy will be in helping the airline overcome its financial challenges.

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