SpiceJet stock up 15% on stake sale reports

SpiceJet stock surged 15% on Friday following reports of a stake sale by Sun group which owns the airline. The stock closed at Rs 16.06 which was nearly 15% higher than the previous closing price.

The airline is restructuring its operations and has cut down its fleet size by ten planes to contain losses and the management has been looking for ways to turn around the airline.

"While the company is exploring various options to further capitalise we are unable to comment on specifics at this stage,'' said a SpiceJet spokesperson.

The airline cut second quarter net loss to Rs 310 crore from Rs 559 crore due to improvement in revenue and cost control measures. The result was impacted by one off restructuring expense of Rs 75 crore.

The airline posted a combined loss of about Rs 1,000 crore in last fiscal and the senior management has been in discussions with potential investors for last several months to raise capital through debt or equity route.

Sources had earlier told this paper that the airline was planning to raise $ 100 million (about Rs 600 crore) in capital but that has not materialised yet. Fundraising has become essential as accumulated losses have eroded the budget airline's net worth and auditors have raised questions over continuance of operations. The airline has been delaying payments to vendors and suppliers too and is hoping for a positive settlement on pending dues.

Centre for Asia Pacific Aviation estimates the airline would require about $ 250 million of fresh funding.

"We need to re-capitalise, given the historic losses. It will help us get sufficient growth capital and take care of the liabilities. Given our improving operational parameters, I believe many parties are interested in investing in us. There should be no comparison to Kingfisher, because in its last six months it had passenger load around 40% and both market share and the product plummeted," SpiceJet chief operating officer Sanjiv Kapoor said earlier this week.