India’s SpiceJet in talks to raise $200m to ease financial woes

Indian budget airline SpiceJet said it’s in talks with bankers to raise as much as $200m in fresh capital after reporting a worse than expected quarterly loss, as the Indian airline looks to work a way out of financial distress.

The carrier will also spin off its cargo business into a separate company, SpiceXpress, in the quarter ending September 30 and add freighters in the financial year 2023, chairman Ajay Singh said in the filing Wednesday.

SpiceJet chief financial officer Sanjeev Taneja, who took charge in 2020, resigned effective immediately. The board has identified the replacement, who will take over in September.

The no-frills carrier posted a loss of INR7.89bn ($99m) for the three months through June, according to the filing. That was worse than the average analyst estimates of a INR6.27bn deficit.

“The industry has been witness to one of the most severe operating environments in the recent past which impacted the progress and recovery,” Singh said. High jet-fuel prices and depreciating rupee were “major contributors,” he said.

The omicron outbreak witnessed in India earlier this year put a dent in nascent travel demand, disrupting local airlines’ early recovery following the deadly delta wave in 2021. Credit rating firm ICRA estimates that India’s airlines lost $3.4bn in the year through March.