SpiceJet promoter Ajay Singh has decided to infuse Rs 500 crore into the airline through subscription of new shares and convertibles or both, the airline said in a report on Wednesday.
The infusion of fresh capital is expected to substantially strengthen the airline operator’s financial position and its path to sustained growth. The airline faced financial constraints in the competitive airline industry, but was confident of its growth potential.
The company’s board of directors, which met today, considered the possibilities of obtaining new capital where the founder decided to invest funds.
With this fund infusion from the promoter, SpiceJet would be eligible for additional credit facilities of INR 206 crore under the Emergency Credit Facility Guarantee Scheme, the airline said in a report. The airline is already using the US$50 million in ECLGS funds it has already received and its own cash to revive its grounded aircraft.
Two of the grounded aircraft, a Boeing 737 and a Q400, have been put into service so far and more aircraft are expected to rejoin the fleet soon, the report said.
Ajay Singh, Chairman and CEO of SpiceJet says
Ajay Singh, Chairman and CEO, SpiceJet says “SpiceJet has a bright future and I am committed to helping it reach its full potential. This investment will enable the airline to accelerate its growth plans and capture new market opportunities, increase its revenue and profits, we are committed to building a sustainable and profitable business and this investment is a reflection of that commitment, I am confident that SpiceJet, a strong brand that has served passengers for over 18 years, will be a long-term success and I am excited to be a part of that journey.”
The Directorate General of Civil Aviation (DGCA) today placed SpiceJet Airlines under “enhanced surveillance” as part of its precautionary measure. The main purpose of enhanced oversight is to ensure that potential adverse impacts on flight operations do not occur due to financial problems.
SpiceJet operates about 250 flights daily to 48 destinations in India and to international destinations. Its fleet is a mix of aircraft including the Boeing 737 Max, Boeing 700 and Q400.