New Delhi [India], July 12 : SpiceJet promoter Ajay Singh has decided to infuse Rs 500 crore into the airline by way of subscribing to fresh equity shares and through convertible instruments, or both, the airline said in a release on Wednesday.
The infusion of fresh capital is expected to substantially strengthen the airline operator’s financial position and its journey towards sustained growth. The airline has been struggling with financial constraints in a competitive aviation industry, but it was confident about its growth potential.
The Board of Directors of the Company, which met today, considered options for raising fresh capital where the promoter decided to infuse funds.
With this fund infusion by the promoter, SpiceJet would be entitled to additional credit facilities of INR 206 crore under the Emergency Credit Line Guarantee Scheme, the airline said in a release. The airline is already utilising USD 50 million in ECLGS funds that it has already received and its own cash to revive its grounded aircraft.
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched in May 2020 as part of Aatmanirbhar Bharat Abhiyaan to support eligible Micro, Small and Medium Enterprises (MSMEs) and business enterprises in meeting their operational liabilities and restarting their businesses in the context of the disruption caused by the COVID-19 pandemic. This scheme covers all sectors of the economy.
Two of the grounded aircraft, a Boeing 737 and a Q400, have been operationalised so far and more planes are expected to re-join the fleet soon, the release noted.
“SpiceJet has a bright future and I am committed to helping it achieve its full potential. This investment will allow the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits,” said Ajay Singh, Chairman and Managing Director of SpiceJet.
“We are committed to building a sustainable and profitable business, and this investment is a reflection of that commitment,” Singh added.
“I am confident that SpiceJet, a powerful brand which has served passengers for over 18 years, will succeed in the long term and I am excited to be a part of this journey.”
Earlier today, the Directorate General of Civil Aviation (DGCA) has put SpiceJet Airlines under “enhanced surveillance” as part of its precautionary measure. The main purpose of enhanced surveillance is to ensure that due to financial issues, there are no potential adverse impacts on flight operations.
SpiceJet operates about 250 daily flights to 48 destinations within India and to international destinations.
Its fleet is a mix of aircraft including Boeing 737 Max, Boeing 700 and Q400s.
SpiceJet was launched in May 2005.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor