SpiceJet (SG, Delhi International) could be thrown a lifeline of around INR2.25 billion rupees (USD28.2 million) this week in the form of a loan under India’s Emergency Credit Line Guarantee Scheme (ECLGS), which the government launched in 2020 to prop up pandemic-hit companies.
Unnamed sources at the stuggling carrier told The Economic Times newspaper that the money would be “used to clear statutory dues and lessor payments.” SpiceJet had originally applied for INR2.8 billion (USD35 million) in loans under the scheme, according to the newspaper.
“The fundraising process has started in full earnest,” the sources added, referring to the INR20 billion (USD250 million) the airline said last month that it was striving to raise.
SpiceJet chairman and managing director Ajay Singh trumpeted the fundraising efforts again last week on the sidelines of an industry event, saying that various means were being approached, including the sale of a shareholding in the budget airline. “We are exploring and ready to look at all of the options that are on the table. We will ensure SpiceJet remains financially vibrant,” he was reported as saying.
Singh holds a stake of around 60% in the airline, 44.24% of which is reportedly pledged with lenders.
Spicejet last week unveiled Ashish Kumar, former vice president and head of corporate finance at IndiGo Airlines (6E, Delhi International) parent Interglobe, as the carrier's new CFO after predecessor Sanjeev Taneja resigned on August 31 after the company posted a widening net loss of INR7.89 billion (USD99 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 about the company’s ability to continue as a going concern. [...] The company’s accumulated losses (as of March 31, 2022) amount to INR59.13 billion [USD743 million], which has resulted in a complete erosion of its net worth. [...] Current liabilities exceeded current assets by INR64.09 billion” (USD805 million).
SpiceJet employees alleged on September 7 a delay in the disbursal of their salaries for the second consecutive month, but the airline commented that the payments were being made in “a graded format.”
