SpiceJet Shares Climb On News Of Possible Sale By Promoter: Report
SpiceJet promoter Ajay Singh is exploring a possibility of a partial stake sale in the airline, with the company's shares rising over 12 per cent on those news reports.
An ANI tweet quoted a SpiceJet spokesperson as saying, “The company continues to be in discussions with various investors to secure sustainable financing and will make appropriate disclosures in accordance with applicable regulations.”
According to reports, Mr Singh is in talks with a Middle Eastern airline and a few Indian firms to sell a partial stake in the airline. This is due to the airline's urgent need for recapitalisation in order to maintain operations. Mr Singh currently holds a 60 percent stake in the budget carrier.
That led to the SpiceJet stock rising by 12.16 percent to Rs 49.80 per share on the BSE on Wednesday.
After SpiceJet disclosed that it had reached a deal with the Airports Authority of India (AAI) and paid off all outstanding principal balances owed to the airport operator, its stock price increased by 5 percent on August 2 as well.
SpiceJet was placed on a “cash and carry” basis by the AAI in 2020 because the airline was unable to pay its past dues. In the “cash and carry” arrangement, the airline was required to pay the AAI on a daily basis for a variety of fees associated with running flights, including navigation, landing, parking, and others.
SpiceJet's ability to clear the pending dues reflects the airline's improved cash flow in recent times.
In another big boost for the airline, AAI will release SpiceJet's Rs 50 crore bank guarantee following the airline clearing all its principal dues. That will result in additional liquidity for the airline, SpiceJet had said in a statement.
However, due to a number of issues and certain pilots' failure to follow required training standards, SpiceJet has recently experienced a very tumultuous period.
The Directorate General of Civil Aviation (DGCA), the industry watchdog, stopped 90 pilots of the airline from flying Boeing 737 Max aircraft in April 2022 after discovering they were not properly educated.
The aviation regulator directed the airline to retrain the pilots and imposed a fine of Rs. 10 lakh since the pilots were trained on a defective simulator.
Numerous mishaps involving SpiceJet and other carrier aircraft that either returned to their originating station or proceeded landing at the destination with reduced safety margins were reported this year.
Director General of Directorate General of Civil Aviation (DGCA) Arun Kumar recently told ANI that despite frequent hiccups, aircraft systems are reasonably reliable and have many redundancies. However, component failures do not necessarily mean that the passengers' safety is in jeopardy.
Following at least eight cases of technical malfunction in its aircraft since June 19, the aviation regulator DGCA ordered SpiceJet to run a maximum of 50 percent of its flights, which were permitted for the summer schedule, for eight weeks at the end of July.
