SpiceJet shares fall over 5% amid financial concerns

14 Feb 2024 , 01:10 PM

On February 14, SpiceJet’s stock dropped more than 5% as CNBC-TV18 revealed that investors are wary about funding being poured into the low-cost airline.

Citing sources, CNBC-TV18 said that SpiceJet is still experiencing cash issues and that, as a result, several of its employees’ wages, TDS payments, and EPFO deposits have been postponed.

SpiceJet announced last month that it had successfully raised the first tranche of capital infusion, which amounted to ₹744 Crore, by issuing securities to investors on a preferential basis.

At a meeting on January 25, the airline announced that its Board of Directors had approved the preferential allocation of 5.55 Crore equity shares to 54 subscribers. The Board of SpiceJet also approved the issuance of 9.33 Crore warrants to Silver Stallion Limited and Elara India Opportunities Fund Limited. Subscriptions to the warrants provide the opportunity to apply for an equivalent number of equity shares.

The airline’s shares fell sharply, and as of Wednesday at 11:30 a.m. on the BSE, they were trading 5.1% lower at ₹62.25. The stock’s 52-week low is ₹22,65, and its 52-week high is ₹77.5.

A SpiceJet representative stated that the pension fund dues will be deposited in the ‘near future’ and that over 75% of the workforce’s January 2024 pay have already been credited. The remaining employees’ salaries are currently being processed.

SpiceJet said earlier this week that it will be reducing its workforce. Roughly 1,400 workers, or 10–15% of the company’s total workforce, are scheduled for layoffs. 

In order to achieve profitable growth and position ourselves to take advantage of the prospects in the Indian aviation market, SpiceJet has implemented a number of initiatives, including workforce rationalization, as part of our turnaround and cost-cutting strategy in the wake of the recent investment infusion. We expect an annual savings of up to ₹100 Crore through this project alone,’ a SpiceJet spokeswoman stated.

From ₹835 Crore in Q2FY23 to ₹428 Crore in Q2FY24, SpiceJet’s net loss decreased.

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