SpiceJet rebounds post 4-day fall, sprints 6% as board allots 48 crore shares to QIBs

So far this year, the stock of this airline operator rose 18 percent

SpiceJet shares surged 6 percent to Rs 70 on September 23, following four consecutive days of decline, after the airline’s board approved the issuance and allotment of 48.71 crore shares to qualified institutional buyers at Rs 61 per share.

The rebound comes amid the airline's ongoing efforts to raise up to Rs 3,000 crore, a plan approved by shareholders last week. SpiceJet, struggling with financial and legal challenges, including grounded aircraft, is exploring multiple funding options to meet its debt obligations.

The capital raised will primarily be used to settle outstanding liabilities to creditors, such as aircraft and engine lessors, engineering vendors, and financiers.

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Despite the funding boost, SpiceJet is facing additional setbacks. The Supreme Court recently upheld a Delhi High Court ruling that mandated the grounding of three aircraft engines for failing to meet payment obligations to lessors Team France 01 SAS and Sunbird France 02 SAS. This will result in two planes being taken out of service, further disrupting the airline's already strained operations.

Currently, SpiceJet operates a fleet of 21 aircraft, and the grounding of these planes adds more pressure. While the new funding will offer short-term relief, the airline must focus on stabilising operations and strengthening its financial position to compete effectively in the highly competitive aviation sector.

According to the airline’s preliminary placement document, its financial struggles have hindered its ability to meet statutory obligations on a monthly basis.

As of September 15, SpiceJet’s outstanding statutory dues amounted to Rs 601.5 crore. A significant portion of the proceeds from the share placement will be allocated to clearing these dues, including Rs 297.5 crore for Tax Deducted at Source (TDS), Rs 156.4 crore for employees’ provident fund deposits, and Rs 145.1 crore for Goods and Services Tax (GST).

So far this year, the stock of this airline operator rose 18 percent, outpacing benchmark Nifty 50's 16 percent surge.

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