In a significant turn of events, SpiceJet, one of India's prominent budget airlines, is gearing up for a major turnaround under the leadership of its Chairman and Managing Director, Ajay Singh. After facing numerous challenges, including financial struggles, legal battles, and the grounding of several aircraft, SpiceJet is now poised to regain its footing in the Indian aviation industry.
Financial Revitalization
SpiceJet has recently completed a successful fundraising round, securing ₹3,000 crore through a Qualified Institutional Placement (QIP) and an additional ₹736 crore from earlier funding rounds. This fresh capital infusion is a testament to the airline's resilience and its ambitious growth plans. According to Ajay Singh, this funding will be sufficient to support operations for the upcoming years and drive the expansion and revival of the airline, similar to its successful turnaround in 2015.
Fleet Expansion Plans
A key component of SpiceJet's revival strategy is the expansion of its fleet. The airline aims to grow its current fleet of 28 aircraft to 100 by the end of 2026. This ambitious plan involves ungrounding existing aircraft and adding new ones. By the end of the financial year 2025, SpiceJet targets having 40 planes in operation, with plans to double this number to 80 by the end of the financial year 2026.
To achieve this, SpiceJet will not only rely on new aircraft deliveries but also on the secondary market. The airline plans to take back into service its 36 grounded aircraft due to a lack of spares and may also take planes on short-term wet leases during periods of high demand, such as the festive and year-end seasons.
Repayment of Pending Dues
One of the significant hurdles SpiceJet has faced is the accumulation of substantial debts, including ₹650 crore in statutory dues and ₹3,700 crore owed to its lessors. However, Ajay Singh is confident that these obligations will be cleared soon. Recent settlements with some of the lessors have already been made, and the remaining dues are expected to be settled quickly using a portion of the newly raised funds.
Operational Revival
The fresh capital will also be used to revive the airline's grounded fleet. Approximately ₹800 crore from the fundraise has been earmarked for putting about 30 grounded aircraft back into operation. This move is crucial as it leverages existing assets rather than relying solely on new aircraft acquisitions, which are challenging to secure in the current global aviation market.
Additionally, SpiceJet has cleared its pending salaries for employees and its GST dues, indicating a return to stability in its operations.
Market Presence and Competition
SpiceJet's expansion plans are not just about increasing its fleet but also about regaining its market share. The airline had a significant market share of 10.5% in 2021 but saw this drop to just over 2% by the end of August 2024. Ajay Singh emphasizes the importance of maintaining a competitive market, rather than allowing a duopoly between IndiGo and the Air India group to dominate the sector.
Staff and Operational Scaling
As part of its expansion, SpiceJet is also focusing on its workforce. The airline has announced that 150 staff members who were sent on furlough last month will be reinstated as operations scale up. This move reflects the airline's confidence in its growth plans and its commitment to its employees.
Conclusion
SpiceJet's journey towards revival is marked by significant financial, operational, and strategic initiatives. With a clear path to profitability, a robust fleet expansion plan, and a commitment to settling its dues, the airline is positioning itself for a strong comeback. As Ajay Singh aptly puts it, "This is an airline that refuses to die," and with the current momentum, SpiceJet is indeed on the runway to reclaim its place as a vibrant player in the Indian aviation industry.
