SpiceJet gains on talk of capital infusion

Stock has gained on talks of capital infusion in an effort to reduce debt and strengthen balance sheet

Shares of SpiceJet were up nearly 4% at Rs 17.20 on the Bombay Stock Exchange on reports that the company is in talks to infuse capital in an effort to reduce debt and strengthen its balance sheet.

Fund raising has become essential as accumulated losses have eroded the budget airline’s net worth.

The low-cost airline's net loss widened to Rs 321 crore in the fourth quarter ended March from Rs 186 crore in the corresponding period last year due to expensive jet fuel, a falling rupee and slow passenger growth. This is third successive quarterly loss for the airline, taking the total to Rs 1,003 crore in 2013-14.

SpiceJet’s revenue in the quarter grew eight per cent to Rs 1,589 crore and passenger yield improved 17 per cent to Rs 4,735, but these could not contain the losses. In expenses, fuel, lease rent and airport charges increased while maintenance costs declined.

As per the guidelines issued by the government in September 2012, a foreign airline can hold upto 49% stake in a domestic airline which is 51% held by local investors.