After rising 5% on Tuesday on account of clearing its dues with the Airports Authority of India (AAI), the shares of Spice Jet soared 17.92% higher on Wednesday’s early trades. They reached an intraday high of ₹ 52.30 a piece on the bourses.
This happened after the Airport Authority of India said that it will release SpiceJet’s ₹50 crore bank guarantee following the airline clearing all its principal dues. This will lead to additional liquidity for the company.
The budget carrier’s shares escalated by 43.58% in the past five days. If an investor would have invested ₹1,00,000 in the company’s shares five days ago, the value of their holdings would have been ₹ 1,43,580 today.
The company’s share price advanced after it reported that its operations are normal and that it did not have to cancel any of its flights. Further, it said that it had cleared all its outstanding principal dues to the Airports Authority of India (AAI).
“With this, SpiceJet will no longer remain on ‘cash and carry at AAI-run airports across the country and will revert to advance payment mechanism for daily flight operations,” SpiceJet said in a statement.
The AAI had put SpiceJet on a cash and carry basis in 2020 after the airline was unable to clear its previous dues. Under this model, airlines have to make daily payments to the AAI for various charges- navigation, landing, parking and others to operate flights.
On July 27, 2022, the DGCA ordered SpiceJet to operate not more than 50 per cent of its flights, which were approved for the summer schedule, for a period of eight weeks and had issued a show cause notice to the airline following a slew of incidents of technical malfunction in its aircraft since June 19.
The airline is said to be in active talks with a middle eastern aviation company for a possible sale of a stake. The company has expressed interest in buying a 24% stake in SpiceJet and getting a seat on the board of the company. Further one of its Dubai-based lessors had asked the regulator to deregister three of SpiceJet’s planes.
Reports from ET Now and CNBC TV 18 suggested that SpiceJet is also in talks with a large Indian conglomerate, which has approached the carrier’s promoter, Ajay Singh, for a stake sale. Ajay Singh currently holds a 60% stake in the company and is exploring possibilities of a partial sale of the same.
SpiceJet currently holds nearly 10% of India’s domestic market and operates a fleet of about 80 narrow-body aircraft, more than half of which are Boeing 737 variants. It has been making losses for the last four years. It incurred net losses of ₹ 316 crores, ₹ 934 crores and ₹ 998 crores in 2018-19, 2019-20 and 2020-21, respectively.
The airline posted a net loss of ₹1,248 crores in the April-December period of 2021 and is yet to declare its results for the January to March period of 2022.
Written by Simran Bafna
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