SpiceJet hives off cargo business; approves ₹2,500 cr fundraise

SpiceJet Ltd will also hive off its cargo business into a separate entity by April 1, 2023 as the cash-strapped budget carrier looks to substantially reduce its existing liabilities.

The low-cost airline's board also proposed raising fresh capital of up to ₹2,500 crore by issuing securities to qualified institutional buyers.

The board of directors of the company has agreed to enter into a business transfer agreement with its subsidiary, SpiceXpress and Logistics Private Limited (SXPL), for transfer of its cargo business undertaking as a going concern, on slump sale basis, the airlines says in a stock exchange filing.

The transfer of cargo business undertaking shall be discharged by SXPL by issuance of securities in the combination of equity shares and Compulsorily Convertible Debentures (CCDs) to SpiceJet for an aggregate amount of ₹2,555.77 crore, the filing says.

The restructuring is expected to reduce a big chunk of the airline's debt. SpiceJet board has approved to convert its outstanding lease liabilities to aircraft lessor Carlyle Aviation Partners into equity. SpiceJet will convert shares worth around $29.5 million at a price of ₹48 per equity share.

"As a part of ongoing restructuring with aircraft lessors Carlyle Aviation Partner (or its affiliated entities) and other aircraft lessors, all these CCDs will be transferred to those aircraft lessors who agree to exchange their lease liabilities for an aggregate amount equivalent to total nominal value of such CCDs in accordance with the relevant provisions of applicable laws and receipt of applicable regulatory approvals, as may be required," the filing says.

"The Board of Directors of the Company, as a part of restructuring with aircraft lessor CLSEC Holdings 10 DAC (affiliate entity of Castlelake) and in order to acquire two (2) Boeing model 737-800 airframes, has in-principally agreed to purchase entire share capital of AS Air Lease 41 (Ireland) Limited (the legal and beneficial owner of two (2) Boeing model 737-800 airframes bearing manufacturer's serial numbers 33555 and 33556) from CLSEC Holdings 10 DAC," it adds.

Reacting to these developments, shares of SpiceJet rose 3% in intraday trade to ₹41.70 apiece on the National Stock Exchange (NSE). This compares with a sharp fall in Indian equity benchmarks. The BSE Sensex fell below the 59,000 mark, while the Nifty 50 was trading around near 17,300 level.

Net profit of low-cost carrier SpiceJet surged 160% year-on-year to ₹110 crore for the quarter ended December 31, 2022, aided by strong performance in both passenger and cargo businesses. Revenue from operations rose 2.5% to ₹2,316.8 crore in the third quarter compared with ₹2,262.6 crore in the corresponding period last fiscal.

The airline clocked the highest domestic passenger load factor, the percentage of available seating capacity filled with passengers. Available seat kilometer (ASK), a measure of an airplane's carrying capacity, rose 5%. Yield — the average amount of revenue received per paying passenger flown one kilometre — jumped 21% year-on-year.