Skift Travel News Blog

Indian low-cost carrier SpiceJet said it has restructured its outstanding lease rental worth over $100 million to aircraft leasing firm Carlyle Aviation Partners into equity shares and convertible debentures.

SpiceJet’s board of directors approved issuing fresh equity shares of $29.5 million to Carlyle Aviation, following which the aircraft leasing firm will now have over 7.5 percent stake in the Indian carrier.

As a part of the proposed restructuring with Carlyle Aviation Partners, SpiceJet will also exchange its outstanding lease liabilities for an aggregate amount of $65.5 million into convertible debentures of SpiceJet subsidiary — SpiceXpress and Logistics.

“This restructuring will substantially reduce the existing liabilities of the company and will help in fund raising for business operations,” the company said in a note to investors.

The airline further mentioned that the board has proposed raising fresh capital of up to $303 million through eligible securities to qualified institutional buyers, pending approval from company members.

Carlyle Aviation Partners is the commercial aviation investment and servicing arm of Carlyle’s $143 billion global credit platform.

SpiceJet has also agreed to enter into a business transfer agreement with its subsidiary SpiceXpress and Logistics for transfer of its cargo business undertaking on slump sale basis.

“Accordingly, the cargo business shall be exclusively undertaken by SpiceXpress and Logistics effective April 1 or such other date as may be finalized,” the note from the company read.

SpiceJet had earlier announced its plan to transfer its cargo and logistics services on a slump sale basis to its subsidiary SpiceXpress to help the company raise funds independently.

SpiceJet’s total liabilities, as of December 31, stood at $1.7 billion. In the three months that ended December 2022, the company’s logistics arm raked in a net profit of $1.4 million on revenues of $14.5 million.

Skift had earlier reported that Ajay, Singh, the airline’s chairman and managing director, was reportedly in talks with a Middle Eastern carrier and an Indian conglomerate to partially sell a portion of his 60 percent stake in the budget airline.

Ajay Singh, Chairman and Managing Director of Indian carrier SpiceJet, is said to be in talks with a Middle Eastern carrier and an Indian conglomerate to partially sell a portion of his stake in the budget airline.

Singh holds around 60 percent stake in the airline.

“The company continues to be in discussions with various investors to secure sustainable financing and will make appropriate disclosures in accordance with applicable regulations,” a SpiceJet spokesperson said.

A major Middle Eastern airline has expressed interest to pick a 24 percent stake and a board seat in SpiceJet. An Indian business conglomerate has also approached Singh for a stake in the airline, IANS reported while quoting a source.

With two carriers — Akasa and Jet 2.0 — set to debut in India this year, the stake sale would help bring much-needed equity infusion into SpiceJet, India’s third largest airline by market share.

The airline posted a net loss of $158 million in the April-December period of 2021, and is yet to declare financial results for the January-March period of 2022.

Last year, Indian aviation watchdog Directorate General of Civil Aviation (DGCA) noted that SpiceJet had been operating on “cash and carry” method and approved vendors were not being paid on regular basis.

On August 2, SpiceJet stated that it had entered into a full and final settlement with the Airports Authority of India and has cleared all outstanding principal dues of the airport operator. “With this, SpiceJet will no longer remain on “cash and carry” at AAI run airports across the country and will revert to advance payment mechanism for daily flight operations,” a statement from the airline read.

Last year, SpiceJet had also announced its plan to transfer its cargo and logistics services on a slump sale basis to its subsidiary SpiceXpress to help the company raise funds independently. “The proposed hiving off of SpiceXpress is proceeding as per plan,” the airline spokesperson said.

Last month, DGCA issued a show-cause notice to Spicejet after its aircraft were hit by at least eight incidents of technical malfunction since June 19. The incidents included crack in the aircraft’s windshield, engine catching fire, weather radar malfunction and fuselage door warning.

On July 27, the airline was asked to operate only 50 percent of its approved flights for summer schedule for eight weeks.