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The aviation stock fell up to 6% in intraday trade. It traded 5.48% lower at ₹62.60 on BSE at 11:52 am. In the past year, the stock has given a return of more than 98% outperforming the benchmark index Nifty 50 which rose 30% during the year.
The latest downturn in SpiceJet shares comes following three key issues that the airline encountered a day before.
Crew put on furlough
Facing financial headwinds, SpiceJet has decided to furlough 150 cabin crew members for three months. The budget carrier is operating with a reduced number of planes amid financial, legal and lessor woes. Currently, it has an operational fleet of around 22 aircraft.
A total of 150 cabin crew members will be sent on leave without pay for three months, an airline spokesperson said on August 29.
“SpiceJet has made the difficult decision to temporarily place 150 cabin crew members on furlough for three months…This step has been taken in response to the current lean travel season and the reduced fleet size, with the long-term stability of the organisation in mind,” the spokesperson said in a statement.
During this furlough period, the spokesperson said the cabin crew members will continue to retain their status as employees of SpiceJet, with all health benefits and earned leave intact.
The airline is looking to raise funds to boost its financials.
Enhanced surveillance
Aviation regulator DGCA said the airline has been placed under enhanced surveillance. This will entail increased spot checks and night surveillance to ensure the safety of the airline’s operations.
Based on reports of cancellation of flights and financial stress being experienced by SpiceJet, DGCA said it conducted a special audit of the airline’s
engineering facilities on August 7 and 8 and certain deficiencies were found during the audit.
“In light of the past record and the special audit carried out in August 2024, SpiceJet has once again been placed under enhanced surveillance with immediate effect.
Dubai ops disrupted
Amid reports that the airline had to cancel flights over non-payment of certain dues to Dubai airport, SpiceJet said its scheduled flights from Dubai operated normally after some flights were cancelled due to operational reasons.
“Due to operational reasons, a few SpiceJet flights from Dubai were cancelled. Affected passengers have been accommodated on subsequent SpiceJet flights, on other airlines or provided with a full refund,” an airline spokesperson said in a statement.
When contacted, a Dubai airport official asked the reporter to check with SpiceJet for “information/comment relating to the situation,” according to PTI.
A look at SpiceJet financials
The airline reported profit for the second consecutive quarter though the revenue continued to decline. Its total assets as of June 2024 stood at ₹6,230 crore, up 17% YoY whereas total liabilities at ₹11,252 crore, down 14% YoY, which means liabilities are more than ₹6,300 crore higher than assets.
As per the auditor’s note following Q1 results, the accumulated losses as of June 2024, amount to ₹7,662 crore and this indicates the existence of material uncertainty. It casts significant doubt about the company’s ability to continue as a going concern.
QIP fundraise and will it solve for cash woes?
The SpiceJet Board on July 23, approved raising up to ₹3,000 crore via Qualified Institutional Placement (QIP) and that is expected to be completed by the end of September.
Spicejet says the fresh infusion should enable the airline to expand and unground its fleet, enhance operational capabilitie, settle liabilities and improve market competitiveness.
The airline believes funds will stabilise overall operations.
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