Investors are hesitating to inject funds into SpiceJet, facing severe financial strain. A proposed infusion of Rs 2,250 crore through preferential allotment is uncertain, raising concerns about the airline's operational sustainability.
Initially approved by the board in December, only Rs 744 crore was received on January 26. However, further investment appears unlikely due to the airline's acute liquidity issues. Delayed salary payments and outstanding dues to pension funds and tax authorities exacerbate the situation.
SpiceJet assures that 80% of January salaries have been disbursed, with pending provident fund and tax deductions to be settled promptly. Despite ongoing capital infusion efforts, reports suggest challenges in securing additional funds.
The airline aims to raise an additional Rs 1,500 crore, affirming existing shareholder approval for up to Rs 2,500 crore via Qualified Institutional Placement (QIP). It refutes claims of overdue payments to lessors, emphasizing continued financial commitments and fleet expansion plans.
In a bid to trim costs by Rs 100 crore annually, SpiceJet plans substantial workforce reductions, potentially affecting 1,000-1,500 employees. With around 9,000 staff, the airline perceives excess manpower relative to its operational needs.
Streamlining operations involves discontinuing certain Regional Connectivity Scheme (RCS) routes and releasing surplus staff stationed there. Additionally, fleet modernization and efficiency enhancements are prioritized to optimize performance.
Utilizing funds from the government's Emergency Credit Line Guarantee Scheme (ECLGS) and a pledged infusion of Rs 500 crore by Chairman Ajay Singh, SpiceJet aims to stabilize its financial position. However, legal disputes with lessors over unpaid dues further compound its challenges. Amid uncertainties, its share price closed down 3.44% at Rs 63.37 on Wednesday, reflecting investor concerns about its financial viability.
