Is SpiceJet’s QIP the Solution to its Financial Woes?

SpiceJet to Hold Board Meeting on July 23 for Capital Raising via QIP

No-frills airline SpiceJet announced that its Board of Directors will meet on July 23, 2024 (Tuesday) to discuss and approve raising fresh capital through a qualified institutional placement (QIP) of eligible securities. This strategic move aims to bolster the airline’s financial stability.

Earlier this year, in January, SpiceJet secured in-principle approval from BSE for a substantial fund infusion of Rs 2,242 crore and successfully raised Rs 1,060 crore through preferential issue in two tranches. The Gurugram-based airline witnessed a significant surge in standalone profit after tax (PAT), reporting Rs 119 crore for the January-March quarter of 2023-24, compared to Rs 16.85 crore in the same quarter the previous year.

However, for the entire fiscal year 2023-24, SpiceJet reported a loss of Rs 409.43 crore, an improvement from the Rs 1,503 crore loss in FY23. Despite a profit of Rs 106.82 crore in FY23, the airline recorded a loss of Rs 301.45 crore in the December quarter.

SpiceJet has faced financial challenges for several quarters, including delays in depositing Employee Provident Fund Contributions for its 11,581 staff since January. As of July 19, 33 aircraft—15 Boeing 737s and 18 regional jets Q400—remain grounded due to various reasons, according to aircraft fleet tracking website planespotter.net.

SpiceJet’s fleet consists of 60 planes, including 32 Boeing 737s, 24 Q400s, and four Airbus aircraft (two Airbus 340s and two Airbus A320s) on wet-lease.