SpiceJet presented a revival plan to the government on Friday, under which it plans to attract an equity investment of $200 million from a clutch of investors led by founding promoter Ajay Singh and JPMorgan Chase. The investment, delayed because of Christmas holidays in the US, is likely to be made in about a month and could result in current promoter, Sun Group’s Kalanithi Maran’s, exit from the company as a majority shareholder.
“The meeting was very constructive and we appreciate the support of all stakeholders, including the ministry of civil aviation. Our operations are normal, but it is true we are under financial stress. We had expected the investment to come in earlier, but once the funding comes in our situation will be better,” Sanjiv Kapoor, SpiceJet COO, said after a meeting with top officials like aviation secretary V Somasundaran.
Representatives of oil marketing companies (OMCs) like Bharat Petroleum were also present. With a recent infusion of Rs 17 crore and cash from daily bookings, SpiceJet has cleared OMC dues of about Rs 14 crore (it is now paying them on a daily basis) and previously unpaid salary dues of pilots and senior management for November. However, it still has dues of about Rs 2,000 crore with the Airports Authority of India (AAI), vendors, tax authorities and lessors. It also owes banks about Rs 300 crore.
Asked how the company was able to raise funds for daily operations, Kapoor said, “The cash flow is coming from various sources. Forward bookings is just one of them.”
SpiceJet, which posted a record loss of Rs 1,003 crore in FY14, went into a tailspin earlier this month when aviation regulator DGCA limited its bookings to only 30 days on concerns around its financial health. However, this cap was lifted soon after by the government, which allowed it to take bookings till March 31. The civil aviation ministry also asked AAI to offer credit till December 31.
The airline’s accumulated losses stood at Rs 2,958 crore at the end of Q2FY15 — it currently has a negative net worth of Rs 1,459 crore — leading its auditor, SR Batliboi, to cast doubts on its ability to continue as a going concern. SpiceJet’s domestic passenger market share in November fell to 14.9%, the lowest this year.
The SpiceJet scrip closed up 9.07%, at Rs 19.25, on the BSE on Friday.