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SpiceJet on Wednesday said its promoter Ajay Singh has decided to infuse Rs 500 crore in the airline by subscribing fresh equity shares and/or convertible instruments.
The cash-strapped airline has been under “enhanced surveillance” of the Directorate General of Civil Aviation (DGCA) since June 22 as a “precautionary” measure, the regulator’s officials had said on Tuesday.
Ajay Singh, who is also the chairman and managing director of the airline, said: “I am pleased to announce that I will infuse Rs 500 crore into the company. SpiceJet has a bright future and I am committed to helping it achieve its full potential.”
Singh and his family own 46.95 per cent stake in the airline as on March 31, 2023.
“This investment will allow the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits. We are committed to building a sustainable and profitable business, and this investment is a reflection of that commitment,” Singh added.
With this fund infusion by Singh, SpiceJet would be entitled to additional credit facilities of Rs 206 crore under the central government’s Emergency Credit Line Guarantee Scheme, the carrier noted.
SpiceJet has been incurring losses since 2018-19 (FY19).
The company’s consolidated net loss swelled to Rs 1,744.2 crore in FY22 from Rs 1,029.8 crore in FY21. It has not released FY23 results citing ‘medical incapacitation’ of a key member of its audit committee.
The airline is currently operating about 1,149 flights per week, which are 47 per cent less than in July last year, according to aviation analytics firm Cirium. In a statement, the airline said its board of directors conducted a meeting on Wednesday.
“The Board deliberated on the matter and agreed to issue equity shares and/or convertible securities/equity share warrants on preferential basis to the promoter (Singh) and/or the promoter Group of the company, on preferential basis, in one or more tranches at an issue price to be determined in accordance with the SEBI ICDR (Issue of Capital and Disclosure Requirements) Regulations for an amount of Rs 500 crore,” it added.
This fund infusion will be subject to the approvals of the shareholders of the company, the Securities and Exchange Board of India (Sebi) and “other competent authorities”, it said.
On July 7, the Supreme Court declined SpiceJet’s application to extend the time for making Rs 380 crore interest payment to media baron Kalanithi Maran and his Kal Airways in a share-transfer dispute case.
On July 10, Kal Airways stated that there was no question of an “amicable” settlement with SpiceJet and asked the carrier to pay up the interest amount according to the court order.
The airline is currently under enhanced surveillance but there has been “no operational impact”, the DGCA officials said, adding that this step had been taken as a matter of abundant precaution given the incidents during monsoon season last year.
SpiceJet had reported at least eight incidents of technical malfunction between June 19, 2022, and July 6, 2022, following which the regulator had ordered the airline to operate just 50 per cent of its scheduled flights. This cap was removed by the DGCA on October 21, 2022.
Enhanced surveillance generally includes an increased number of spot checks, especially during the night, officials added.
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