SpiceJet Ltd shares rose about 9 percent to Rs 42 apiece on the BSE in Thursday’s opening deals, after a report said the Indian budget airline is expected to receive an additional loan of Rs 1,000 crore under the amended Emergency Credit Line Guarantee Scheme. (ECLGS) from the government. ) as the airline needs money to bear the heavy costs and pay the outstanding dues.
The company will, with the funds, look into brand new Max (Boeing) aircraft and operate a younger fleet that will increase operational efficiency and “support cash-profitable operations”.
Payment of dues, upon receipt of funds, will “significantly reduce the cost burden and legacy dues,” said an official, adding that “an additional $100 million funding in SpiceJet settles the debate over survivability once and for all” .
The airline, it is said, is already looking for a $200 million fundraiser. And this new funding will “give that extra boost.”
At 9:49 a.m., the stock was trading 6.11 percent higher at Rs 40.80 than its last day closing price of Rs 38.45 apiece. It reached its all-day high of Rs 42 on BSE. The stock has fallen nearly 30 percent in the past six months, while it is down about 42 percent in the past year.
The Ministry of Finance has amended the Emergency Credit Line Guarantee Scheme (ECLGS) to increase the maximum loan amount for airlines under ECLGS 3.0 to 100 percent of their fund-based or non-fund-based loan on the reference dates or Rs. 1,500 crore, whichever is lower; and of the above, Rs 500 crore will be considered, based on the equity contribution by the owner.
SpiceJet welcomes the changes made to the ECLGS for the civil aviation sector, but has asked the government to expand support for jet fuel as well. “This will give airlines a huge boost. I once again ask the government for its support for the inclusion of Aviation Turbine Fuel under GST, which would be a game changer for the entire industry,” said Ajay Singh, SpiceJet chairman and general manager.
For the first quarter ended June 2022, the low-cost airline reported an increase in net loss of Rs 789 crore as high fuel prices and the depreciation of the rupee negatively impacted the budget airline. SpiceJet had a net loss of Rs 729 crore in the quarter ended June 2021.
Meanwhile, total revenue for the reported quarter was Rs 2,478 crore, versus Rs 1,266 crore, a year-over-year growth of 126 percent. The airline also took note of the resignation of Sanjeev Taneja, the company’s chief financial officer, effective August 31, 2022.
InterGlobe Aviation, which is much more stable financially, was up 0.5 percent against Rs 1860. The stock is down 8 percent so far this year.
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