SpiceJet Secures Rs 900 Crore Funding for Fleet Upgrade and Cost-Cutting

Receiving over Rs 900 crore in funding this month, SpiceJet is directing its attention towards upgrading its fleet and implementing cost-cutting measures. The no-frills airline aims to navigate through challenging times. In an internal communication to senior staff, the airline highlighted its significant bank balance, which includes Rs 160 crore obtained as an installment through the government's Emergency Credit Line Guarantee Scheme (ECLGS).

The carrier, which had been facing multiple headwinds in recent months, has so far received around Rs 1,000 crore under the ECLGS. The latest installment came recently after its Chairman and Managing Director Ajay Singh infused funds into the airline, according to an official in the know. Singh, who has been helming the no-frills carrier, has so far put in Rs 200 crore out of the Rs 500 crore fund infusion that he had announced last year.

The official stated that the airline has accumulated funds exceeding Rs 1,100 crore within a three-month period. Recently, the airline disclosed the receipt of the initial tranche amounting to Rs 744 crore as part of the total fundraising target of Rs 2,250 crore through the issuance of securities on a preferential basis. On December 12, the airline announced its intention to generate fresh capital amounting to Rs 2,250 crore through the issuance of securities.

In a meeting with senior officials of the airline, Singh underscored the significance of prudent expenditure and affirmed his personal oversight of major expenses. As per the communication, the airline will give priority to upgrading its fleet, improving on-time performance, and instituting cost-cutting measures to streamline operations. The airline currently maintains an operational fleet comprising approximately 40 planes.

SpiceJet, which has also expressed an interest to bid for bankrupt Go First, will be looking to raise more funds to shore up its financial position. As it embarks on the revival path, the airline has also issued a stern directive of 'perform or perish' to tackle underperformance. In 2023, the carrier flew 83.90 lakh passengers and had a domestic market share of 5.5 percent. The airline has been facing multiple headwinds, including legal woes. Earlier this month, aviation regulator DGCA imposed a fine of Rs 30 lakh on the carrier for lapses in the rostering of pilots for operations in low visibility conditions. Shares of SpiceJet marginally rose to Rs 61.90 apiece in the morning trade on the BSE.