Moneycontrol Bureau
Shares in troubled low-cost carrier SpiceJet tumbled 14.7 percent in early trade today before recovering some ground to trade 5.6 percent lower, amid a flurry of bad news that has led to questions whether the country’s fourth-largest aviation firm would come out intact from a severe fund crunch.
SpiceJet, which has accumulated losses of over Rs 3,000 crore (of which Rs 1000 crore was notched up in the last fiscal year itself) and Rs 4,000 crore of debt, has been making headlines for a number of wrong reasons: flight cancellations, reduction in operations as well as reports of the company not being able to have enough capital to maintain operations.
On Saturday, the Directorate General of Civil Aviation (DGCA) revoked flight slots that SpiceJet has not been using and asked it to pay unpaid salaries of its staff before December 15.
There have also been reports of a pilot exodus with many reportedly heading to rivals such as Jet Airways. In fact, during the latest quarterly results, auditors had expressed concerns over SpiceJet’s ability to operate as a “going concern”.
The SpiceJet board is about to meet today where, among other things, recapitalization is expected to be discussed. Analysts say a fund infusion is necessary to keep the firm going and last month, COO Sanjeev Kapoor had said the firm was close to striking a deal with an investor, a move tha t investors have been waiting for long now.
Shares in rival Jet Airways, meanwhile surged 8 percent, as the airline was expected to benefit from the steep fall in crude prices recently, and as the firm began shutting down its low-cost operations (JetLite) in December to focus on full-service operations.
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