SpiceJet's Strategic Plan: Raising ₹32.36bn from Investors

SpiceJet's Fundraising Efforts

SpiceJet has informed investors of its intention to raise 32.36 billion rupees (approximately $441.4 million) to settle liabilities, unground aircraft, induct new planes, and for general purposes. The low-cost carrier made this presentation on September 6 as part of its efforts to attract investors for its planned capital infusion.

The airline plans to raise INR 25 billion (equivalent to USD 298 million) through a qualified institutional placement, with the remaining INR 7.36 billion (USD 87.7 million) coming from previous warrants and a contribution from founder Ajay Singh. Presenters informed potential investors that settling liabilities and restructuring with current lessors would enable adding more aircraft to the fleet. Investing in ungrounding the existing fleet and acquiring new aircraft would also enhance the airline's operations and revenues. Lastly, allocating funds for statutory payments and settling vendor debts would significantly reduce financing costs.

SpiceJet's operational fleet has decreased from 74 aircraft in 2019 to 28 currently, with 36 jets grounded due to unpaid dues and funding issues. This includes around INR 37 billion (USD 517.7 million) owed to MRO providers, aircraft and engine lessors, and an additional INR 6.5 billion (USD 77.4 million) in outstanding statutory dues.

Turnaround strategies encompass fleet ungrounding and expansion, increasing market presence on the most profitable routes, considering long-haul flights to Europe and North America, cost rationalization, and an increased focus on ancillary revenue, cargo, loyalty programs, and co-branded cards.

Earlier this year, SpiceJet had intended to raise INR 22.5 billion (approximately $300 million) through preferential issues but only managed to secure INR 10.6 billion (about $142.2 million) after a critical investor backed out. In late July, SpiceJet's board approved another INR30 billion (around $400 million) capital raising through institutional placements. In mid-August, Singh announced that he would sell off a 10% stake in the carrier to help raise these funds. The refined proposal discussed last week still needs to be voted on by the shareholders for approval.

On September 6, SpiceJet announced to the Bombay Stock Exchange that it had signed a term sheet with Carlyle Aviation Partners to restructure aircraft lease obligations totalling $USD137.68 million as of June 30, 2024. This would involve adjusting outstanding settlements and waivers owed Carlyle and its affiliates to USD 97.51 million. According to data, Carlyle has thirteen aircraft at SpiceJet, consisting of two B737-700s, eight B737-800s, and three B737-900ERs.