Bengaluru: Indian carrier Spicejet Ltd said, on Tuesday, it will consider options to raise fresh capital by issuing securities to qualified institutional buyers amid a string of quarterly losses as competition heats up in the aviation industry.
The plan to raise capital comes as Spicejet’s cash reserves dwindle and new entrant Akasa Air jostles for a share of the market while rival Air India ramps up its revamp plans with mammoth orders for new aircraft.
Spicejet’s market share slipped to 7.3% in January from 7.7% in December, while IndiGo retained the lion’s share of 56.3%. Akasa grabbed 2.8%, while Air India’s share was steady at 9.2%, data from the country’s aviation regulator showed.
Spicejet’s passenger load factor, which measures the percentage of available seating capacity that has been filled with passengers, outdid rivals at 91% in January.
Last week, Spicejet postponed its board meeting to approve financial results for the December quarter to Feb. 24.
At the board meeting on Friday, Spicejet will also consider issuing shares on a preferential basis after converting outstanding liabilities into equity shares. The airline’s total equity and liabilities stood at 88.11 billion Indian rupees ($1.06 billion) as at Sept. 30, while cash and cash equivalents were 66.08 million rupees.
Its losses widened in the September quarter, hit by soaring fuel costs and a depreciating rupee. The company had last turned a profit in the three months that ended in December 2021, when the industry was roiled by pandemic-led curbs.
Meanwhile, the biggest competitor IndiGo returned to profit in the latest quarter that ended in December led by increased demand for domestic and international air travel that outpaced the high fuel costs and currency volatility.
Spicejet shares have recovered sharply from multi-year lows hit earlier this month and are down around 3% thus far in the year, compared with a 7% drop in IndiGo owner InterGlobe Aviation. –Reuters
($1 = 82.7630 Indian rupees)
(Reporting by Priya Sagar in Bengaluru; Editing by Savio D’Souza)
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