Weak Q1 weighs on SpiceJet, Ajay Singh plans Rs 3,000 crore QIP

So far this year, shares of SpiceJet declined over 10 percent

Shares of SpiceJet dropped over a percent to Rs 54 apiece on August 16, following the airline’s weak show in the June-ended quarter on the back of reduced flight operations, amid growing financial challenges. In response to shrinking profitability, the budget carrier said it plans to raise Rs 3,000 crore through a qualified institutional placement (QIP).

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The company's consolidated net profit fell by 20 percent year-on-year (YoY) to Rs 158 crore in Q1FY25, owing to delays in flight services. Total income for Q1FY25 also saw an 8.3 percent YoY decrease, coming in at Rs 2,077.7 crore. However, on a sequential basis, net profit after tax increased by 24 percent from Rs 127 crore in the preceding March quarter.

SpiceJet has been facing a prolonged cash crunch, exacerbated by ongoing legal disputes over unpaid dues to aircraft and engine lessors, lenders, and former promoter Kalanithi Maran.

Aviation analytics firm Cirium said SpiceJet's weekly flights have dropped by 30.3 percent YoY to 882 in August.

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To bolster its financial standing and support growth ambitions, SpiceJet has will now aim to raise Rs 3,000 crore through QIP, expected to conclude by the end of September 2024. "The upcoming Rs 3,000 crore fundraise through QIP will be crucial in strengthening our financial base and positioning SpiceJet for long-term success. We have confidence in the resilience of our business model and remain committed to delivering the best flying experience to our customers," said Ajay Singh, Chairman and MD of SpiceJet.

The company added that it remains focused on its long-term strategy of expanding its domestic and international network, investing in newer, more fuel-efficient aircraft, and leveraging technology to drive innovation and efficiency across its operations.

So far this year, shares of SpiceJet declined over 10 percent, underperforming benchmark Nifty 50's rise of 11 percent.

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