SpiceJet Narrows Net Loss To Rs 428 Cr In Q2, To Raise Rs 2,250 Cr Via Equity Shares, Warrants

After the airline revealed its second-quarter earnings on Tuesday, SpiceJet Ltd.'s shares experienced a steep decline during afternoon trading. On the BSE, the stock ended with a 4.18% decrease in value, closing at Rs 58.04 a share. The stock plummeted 8.70 per cent from its previous closing of Rs 60.57 to a day low of Rs 55.30. SpiceJet Ltd., an aviation carrier, informed the exchanges in a statement today that the board has authorised funding a total of Rs 2,250 crore through the issuance of equity shares and warrants.

A total of 32.08 crore equity shares will be offered by SpiceJet for Rs 50 a share which is 21% discount from the stock's intraday high price of Rs 63.49 on Tuesday. Roughly Rs 1,600 crore would be raised through the issuance of equity shares. Furthermore, the board has approved the issuance of 13 crore convertible warrants, valued at Rs 50 each, for a total of Rs 650 crore.

"The proposed preferential issues comprise of investors like Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, Resonance Opportunities Fund and many more for issuance of equity shares and equity warrants aggregating to over INR 2,250 Crore," said SpiceJet in a stock exchange filing.

"This is a significant fund raise and it is designed to strengthen SpiceJet's financial position, enhance operational capabilities, settle outstanding issues and position the airline again for sustained growth in the dynamic aviation sector," said Ajay Singh, Chairman and Managing Director, SpiceJet.

"We are confident that this capital raise will help us achieve our goal of building a world class airline in India. I personally thank all our stakeholders, all those who work for SpiceJet and all those who work with SpiceJet and who have patiently waited for this day. They have allowed us the time and opportunity to overcome a difficult phase in our history, and we are grateful to them," Singh said.

"The proposed fund infusion will go a long way in enhancing product presence and market reach of SpiceJet and will also provide deep financial foundation. The capital raised will be instrumental in funding operational expansion initiatives, including fleet enhancement, route network expansion, and technological advancements," as per a regulatory filing filed by SpiceJet on Tuesday.

In comparison to a net loss of Rs 835 crore in Q2 FY2023, SpiceJet's Q2 FY2024 net loss was Rs 428 crore. Its revenue dropped to Rs 1,348 crore in the quarter ending September 30, 2023, a decrease of roughly 30%. The firm planned and gradually infused Rs 500 crore in new capital throughout the quarter, of which Rs 200 crore had already been received by the company.

Approximately Rs 230 crore less in debt was incurred during Q2FY24 as a result of the debt-to-equity conversion with Carlyle Aviation Partners, which involved the allocation of approximately 4.81 crore equity shares at a price of Rs 48 per share. The business settled its debts with aircraft lessor Castle Lake and successfully repaid an Rs 100 crore loan from City Union Bank.

"The July-September quarter has historically been a challenging period for the aviation industry. This year, the challenges were further compounded by elevated fuel prices, impacting operational costs. SpiceJet, however, has been proactive in implementing cost-saving measures and remains focused on adapting to the dynamic market conditions," CMD Ajay Singh said.

"In the face of these challenges, SpiceJet emphasizes its commitment to operational efficiency, customer service, and strategic decision-making to navigate the complexities of the aviation landscape. The airline continues to explore avenues for growth and profitability in the evolving market and the fresh infusion of over INR 2,250 Crore in the Company will bring renewed energy to adapt to the changing circumstances," he added.
The new funding will improve SpiceJet's financial standing and provide it with additional funds to devote to expansion initiatives.