Troubled low-cost carrier SpiceJet will restructure its balance sheet, raise fresh equity and go for fleet expansion, said chairman Ajay Singh on Monday. The airline, which is in the process of hiving off its cargo business, will raise capital in thenew subsidiary and may be to some extent in the parent entity.
Speaking at the CAPA India Aviation Summit 2023, Singh added, “We are trying to restructure the balance in a significant way. You will see a vastly different balance sheet over the next two quarters.”
In a move which will deleverage its balance sheet, enabling it to access fresh funding, SpiceJet last month restructured its outstanding dues worth $100 million to aircraft lessor Carlyle Aviation Partners into equity shares and compulsorily converted debentures (CCDs).
The airline’s board approved issuing fresh equity shares of $29.5 million (`244.28 crore) following which, Carlyle Aviation Partners will have an over 7.5% equity stake in SpiceJet. “The process has already started and we saw some of that in the last month and the next two quarters will see significant action to clean up the balance sheet. There will be fresh raising of capital and aggressive push to add aircraft,” Singh added.
The company is betting on its cargo business for growth. Also, in February, the board passed a special resolution (subject to nod from its lenders) which allows it to enter into a business transfer agreement with subsidiary SpiceXpress and Logistics (SXPL) for the transfer of its cargo business undertaking on a slump sale basis.“We will be getting a significant number of cargo aircraft over the next few months,” Singh added while also stating that the grounding of the B737 Max aircraft ordered by the regulator, was a set-back bigger than the Covid-19 pandemic.