SpiceJet Ltd shares jumped about 9 per cent to Rs 42 apiece on the BSE in Thursday’s opening deals after a report said that the Indian budget airline carrier is expected to receive an additional Rs 1,000 crore loan under the government’s modified Emergency Credit Line Guarantee Scheme (ECLGS) as the airline is in need of funds to sustain heavy cost burden and pay pending dues.
The company, with the funds, will look to induct brand-new Max (Boeing) planes and operate a younger fleet which will increase operational efficiency and “support cash-profitable operations”.
Payment of dues, post receipt of funds will “significantly reduce cost burden and older dues”, an official said adding that “an additional funding of more than $100 million into SpiceJet settles the survivability debate once and for all”.
The airline, it is being said, is already looking at a fundraise of $200 million. And this new funding will “provide added impetus to that”.
At 9.49 am, the stock was trading 6.11 per cent higher at Rs 40.80 over its last day’s closing price of Rs 38.45 a piece. It touched the day’s high of Rs 42 on BSE. The stock has fallen nearly 30 per cent in the last six months, while it has plunged about 42 per cent in the past one year.
The finance ministry has modified the Emergency Credit Line Guarantee Scheme (ECLGS) to enhance the maximum loan amount eligibility for airlines under ECLGS 3.0 to 100 per cent of their fund-based or non-fund-based loan outstanding as on the reference dates or Rs. 1,500 crore, whichever is lower; and of the above, Rs 500 crore shall be considered, based on equity contribution by the owner.
SpiceJet has welcomed the changes made in the ECLGS for the civil aviation sector but has asked the government to extend support on jet fuel as well. “This will provide a tremendous boost for airlines. I request the government once again for its support for including Aviation Turbine Fuel under GST, which would be a game changer for the entire sector,” Ajay Singh, Chairman and Managing Director, SpiceJet said.
For the first quarter ended June 2022, the low-cost carrier reported widening of net loss at Rs 789 crore as high fuel prices and rupee depreciation adversely impacted the budget carrier. SpiceJet had a net loss of Rs 729 crore in the quarter ended June 2021.
Meanwhile, its total revenue for the reported quarter was Rs 2,478 crore as against Rs 1,266 crore, a year-on-year (YoY) growth of 126 per cent. The airline also took note of resignation of Sanjeev Taneja, Chief Financial Officer of the Company, with effect from August 31, 2022.
InterGlobe Aviation, which is financially much more stable, traded up 0.5 per cent at Rs 1860. The stock is down 8 per cent so far this year.
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