SpiceJet (SG, Delhi Int’l) could receive a lifeline of around INR 2.25 billion rupees (USD 28.2 million) this week in the form of a loan under India’s guarantee scheme. Emergency Line of Credit (ECLGS), which the government launched in 2020 to support businesses affected by the pandemic.
Unnamed sources from the struggling carrier told The Economic Times newspaper that the money would be “used to settle legal dues and lessor payments”. SpiceJet initially requested INR 2.8 billion ($35 million) in loans under the scheme, according to the newspaper.
“The fundraising process has started in earnest,” the sources added, referring to the INR 20 billion (USD 250 million) the airline said last month it was trying to raise.
SpiceJet chairman and chief executive Ajay Singh trumpeted fundraising efforts again last week on the sidelines of an industry event, saying various means were being considered, including selling a stake in low cost airline. “We are exploring and are ready to consider all options that are on the table. We will ensure SpiceJet remains financially buoyant,” he said.
Singh has a roughly 60% stake in the airline, of which 44.24% is believed to be pledged to lenders.
Spicejet last week unveiled Ashish Kumar, former vice president and head of corporate finance at IndiGo Airlines (6E, Delhi Int’l), parent company Interglobe, as the carrier’s new chief financial officer following the resignation of his predecessor Sanjeev Taneja on August 31 after the company posted a growing net loss. of INR 7.89 billion (USD 99 million) for the April-June quarter, a loss the airline blamed on high fuel prices and a fall in the value of the rupee.
The auditor’s remarks in the report “cast significant doubt on the company’s ability to continue as a going concern. […] The company’s cumulative losses (as of March 31, 2022) amount to INR 59.13 billion [USD743 million]which resulted in a complete erosion of his net worth. […] Current liabilities exceeded current assets by INR 64.09 billion” (USD 805 million).
SpiceJet employees on September 7 alleged a delay in their salary payments for the second consecutive month, but the airline said payments were being made in “a graduated format”.