SpiceJet Ltd. has prepared a Rs 900-crore overhaul plan comprising cost-cutting measures and improvement in operations after the cash-strapped airline raised funds, according to an internal note.
The company received the first tranche of Rs 744 crore on Friday, more than a month after the low-cost carrier said it would raise Rs 2,250 crore through the issuance of securities to 64 investors. Along with an additional Rs 160 crore from the Emergency Credit Line Guarantee Scheme, SpiceJet now has cash of over Rs 900 crore.
In a recent meeting with top company officials, Chairperson Ajay Singh emphasised the importance of judicious spending, recognising that this opportunity for revival might not come again.
In the plan being dubbed SpiceJet 3.0, all major expenditures will be approved by Singh, according to the note that was shared with senior executives. He has issued a stern directive of "perform or perish", making it clear that underperformers would face significant challenges in the revitalised airline, according to the note.
On the operations front, the beleaguered airline will prioritise fleet upgrades and enhance its on-time performance. A series of cost-cutting measures will be implemented, the note revealed, without divulging details. SpiceJet also hopes to raise more funds in the following rounds of financing.
The revival plan comes at a crucial time for the airline as it juggles poor operational performance, beaten-down financials and a flurry of litigation.
In the quarter ended September, the budget carrier's consolidated net loss narrowed to Rs 449 crore from Rs 833 crore in the year-ago period. Revenue from operations fell 27% to Rs 1,429 crore.
Its market share stood at 5.4% in 2023, with a dismal on-time performance of 29.9% in December, according to the latest data from the Directorate General of Civil Aviation. Amid these challenges, the auditors have consistently flagged issues regarding the company's ability to continue as a going concern.
SpiceJet's stock was trading 5.96% higher at Rs 65.25 apiece on the BSE compared to a 1.58% advance in the benchmark Sensex at 1:12 p.m. on Monday.
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