India's fourth-biggest carrier by domestic market share SpiceJet Ltd is in advanced stages of discussion to raise money, as part of its efforts to reduce debt and strengthen balance sheet, the company said in a statement after registering its biggest annual loss.
Fundraising has become essential for the budget carrier as accumulated losses have eroded the company’s net worth. With entry of new players such as AirAsia, the competition is only going to rise.
“We are in very advanced stages of a capital infusion discussion with an external entity that when completed will help us clean up our arrears and rebuild with confidence,” the company said without disclosing if it is inducting a financial investor or bringing a strategic partner in the form of an international carrier.
The budget carrier, controlled by billionaire Kalanithi Maran's Sun Group, needs at least Rs 1,200 crore to stay afloat, as per a recent report by Sydney-based aviation think-tank Centre for Asia Pacific Aviation (CAPA).
Earlier, the carrier had announced that some potential investors have evinced interest to inject money in the company, without disclosing the names.
The government had allowed FDI up to 49 per cent in domestic airlines two years ago. While AirAsia is set to be the first new airlines to start operations in India with foreign investment, Abu Dhabi-based Etihad had previously picked a minority stake in Jet Airways.
SpiceJet scrip closed the day at Rs 17.10, up 3.32 per cent on the Bombay Stock Exchange in a flat Mumbai market on Tuesday. It has a market cap of Rs 915 crore or around $155 million.
(Edited by Joby Puthuparampil Johnson)