Why SpiceJet’s ?3,000-crore investor lifeline must be taken with a pinch of salt?

SpiceJet has raised ?3,000 crore from multiple investors, with Chairman Ajay Singh's stake reduced to 35%. The airline, which owes ?427 crore in statutory dues (rising to ?794 crore with disputed amounts), is aiming to use the funds for various liabilities, including settling dues, ungrounding planes, and expanding its fleet. SpiceJet blames the grounding of MAX aircraft and COVID-19 for its financial troubles, having lost ?4,611 crore over the past four years. Despite these challenges, it aims to quintuple its operations by 2026, adding 80 planes in 27 months.

The airline has 36 grounded planes and is facing supply chain and lease issues, as well as competition in a near-duopoly market. SpiceJet plans to reassess its fleet strategy, possibly moving towards a single fleet type. While profitability remains a challenge, the airline has survived significant setbacks and intends to scale up. The recent fundraising gives it a lifeline in an increasingly competitive market.