SpiceJet in Talks with Middle Eastern Carrier for 24% Stake Sale: Reports

SpiceJet is said to be in active talks with a Middle Eastern aviation company about a possible stake sale, according to multiple reports on Wednesday, August 3. According to the report, the large Middle Eastern company has expressed interest in purchasing a 24% stake in SpiceJet and gaining a seat on the company’s board of directors.

According to multiple news outlets, SpiceJet is also in talks with a large Indian conglomerate, which has approached the carrier’s promoter Ajay Singh about selling a stake. Singh, who currently owns 60% of SpiceJet, is looking into the possibility of selling a portion of the company.

“The company continues to be in discussions with various investors to secure sustainable financing,” a SpiceJet spokesperson was quoted as saying by CNBC TV18. The spokesperson further added that the company will make “appropriate disclosures in accordance with applicable regulations”.

SpiceJet shares rose 4.05 percent to Rs 46.20 in early trade on Wednesday, according to BSE data. The stock opened the day at Rs 44.40 before settling at Rs 46.20 at the time of writing. SpiceJet shares rose 4.06 percent to Rs 46.15 on the NSE. According to market data, SpiceJet stocks have risen nearly 6% as a result of the news.

On August 2, SpiceJet’s stock rose 5% after the airline announced that it had reached an agreement with the Airports Authority of India (AAI) and had cleared all outstanding principal dues to the airport regulator. “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 on Tuesday.

SpiceJet was placed on a ‘cash and carry’ basis by the AAI in 2020 because it was unable to pay its previous debts. The ‘cash and carry’ model requires the airline to pay the AAI on a daily basis for various charges — navigation, landing, parking, and so on — in order to operate flights.

On July 27, the DGCA ordered SpiceJet to operate no more than 50% of its flights that were approved for the summer schedule for an eight-week period. SpiceJet was issued a show-cause notice by the Directorate General of Civil Aviation (DGCA) on July 6 following at least eight incidents of technical malfunction in its aircraft since June 19.

SpiceJet has lost money for the past four years. In 2018-19, 2019-20, and 2020-21, it lost Rs 316 crore, Rs 934 crore, and Rs 998 crore, respectively. The airline suffered a net loss of Rs 1,248 crore between April and December of 2021. The airline has yet to announce its results for the January-March 2022 period.