After its successful turnaround in 2015, SpiceJet is trying to pull off another comeback and its efforts have got a fillip with a successful fundraise of Rs 3,000 crore. The airline’s Chairman and Managing Director Ajay Singh said the airline wants to quadruple its current planes in the air from 25 to its 2019 strength of 100 in the next two years. 

In an exclusive interview with NDTV Profit on Friday, Mr Singh also said 150 staff members who were sent on furlough last month will be back on the rolls as SpiceJet expands and that the airline has cleared the pending salaries of its employees as well as its GST dues.

To a question on what the airline’s priorities are with the Rs 3,000 crore it has raised, Mr Singh said, “The primary use of the raise is to increase capacity – from the current 25 aircraft back to 100 aircraft in the next two years. We were already a close-to-100 aircraft airline in 2019. Of course, another objective of the raise is to clean up the balance sheet and clear up what is due with our partners who are owed money primarily for the period when the aircraft were not flying during Covid and during the grounding of the MAX (Boeing 737 MAX) aircraft in 2019 and for three years thereupon.”

Stating that the idea is to have the space and the strength to scale up, Mr Singh pointed out that  India is a market that is “absolutely booming” and only 5-6 crore people fly in the country against a population of 140 crore. 

“SpiceJet knows how to do this. It has been an airline which has been around for 18-19 years and has flown with very high occupancy and a great deal of success. We brought about a turnaround in 2015 which was most unexpected and the envy of many. We feel that we are in a better position to bring about another turnaround here. SpiceJet already has all the experience and infrastructure to be a 100-aircraft airline,” he said.

Reviving Existing Aircraft

Mr Singh said Rs 800 crore from the fundraise has been earmarked for the revival of about 30 aircraft that are “sitting on the ground”. 

“Remember, aircraft are difficult to come by in the global aviation market at this point in time. SpiceJet has this great advantage that we have about 30 aircraft which are just sitting on the ground, which need some capital to put them back in the air. So that’s the first objective,” he said, adding that the plan is to be a 40-aircraft airline by next year and then target 100 aircraft. 

“People have said so many times that SpiceJet will not survive. This is an airline that refuses to die. We will not die and we will be a vibrant player in the Indian aviation space again,” he added.

Of the remaining amount, Rs 1,400 crore will go towards paying dues, Mr Singh said, adding that the pending salaries of all employees have already been cleared. 

Furloughed Employees

To a question on the 150 employees furloughed by SpiceJet last month, Mr Singh said they will be brought back as the airline expands.

“These are wonderful people who we have trained. By the way, SpiceJet was perhaps the only airline that actually kept the entire staff during Covid because we felt that they would have absolutely nowhere to go if we were to let them go. So we are very conscious of the fact that we need to get them back on the rolls as soon as possible. And as we scale up and we roll out this pretty ambitious plan, of course all the crew and all that staff has to come back,” he said. 

Secondary market

Mr Singh said the current fundraise will be enough to get to the plan of having 100 aircraft by 2026. He said the airline has taken some deliveries from Boeing and 35-40 planes will come from the secondary market. 

Asked about the market share that the airline is targeting, the SpiceJet CMD said that will come as the number of planes in operation increases. He also pointed out that SpiceJet had a market share of 20% in 2019. 

“But I think a healthy industry requires multiple players. The duopoly that exists today is perhaps not the best thing to happen either for consumers or the industry. And not just SpiceJet, I would wish other players the best as well and I hope that we can have multiple players in the system. We need to ensure that the industry remains healthy. And, for that, it’s important that we bring down the cost of regulation, in terms of the taxes that have been charged, the complexity of the system, et cetera,” he said. 

“We need to address those issues. And we need to address the issue that India has been one of the lowest yield markets, which has improved over the last two years. I think it’s important that airlines are going to be profitable so that they can use the profits towards the growth that the Indian market needs,” he added.

Mr Singh said SpiceJet sees a clear path to profitability because it has been spending a lot on its grounded fleet, and as those planes get back in the air, the fixed cost will come down.

“You will see profitability come quite quickly,” he asserted.

KAL Airways and Kalanithi Maran on Monday said they will seek more than ₹1,323 crore in damages from SpiceJet and its chief Ajay Singh as well as challenge the recent Delhi High Court order in the ongoing dispute between the two sides.
| Photo Credit: REUTERS

KAL Airways and Kalanithi Maran on Monday said they will seek more than ₹1,323 crore in damages from SpiceJet and its chief Ajay Singh as well as challenge the recent Delhi High Court order in the ongoing dispute between the two sides.

On May 17, a division Bench of the court set aside a single judge Bench order that had upheld an arbitral award asking SpiceJet and its promoter Ajay Singh to refund ₹579 crore plus interest to Mr. Maran.

The Bench allowed the appeals filed by Mr. Singh and SpiceJet challenging the single judge’s order, passed on July 31, 2023, and remanded the matter back to the court concerned to consider the petitions challenging the arbitral award afresh.

Against this backdrop, Mr. Maran and his firm KAL Airways have decided to challenge the ruling after consultation with their legal counsel.

The decree holders — KAL Airways and Mr. Maran — “believe that the aforesaid judgement is deeply flawed and warrants further scrutiny”.

“In parallel, they are also seeking damages in excess of ₹1,323 crore, as determined by FTI Consulting LLP, United Kingdom, a globally renowned firm that specialises in estimation of losses arising out of breach of contractual commitments,” KAL Airways said in a statement on Monday.

Further, it said the claim for damages had originally been presented by KAL Airways and Mr. Maran before the arbitral tribunal and “has always remained an integral part of their quest for justice”.

By pursuing both the challenge to the Delhi High Court judgement and the claim for damages, the decree holders hope to secure a just and equitable resolution to the contentious dispute, the statement said.

The dispute arose due to a breach of trust by SpiceJet and has caused “enormous hardship to both KAL Airways and Kalanithi Maran for more than a decade,” it added.

According to the statement, they will pursue the execution of the arbitral award, seeking a refund of the pending dues amounting to ₹353.50 crore.

“This action is also in full compliance with, and supported by, the orders dated February 13, 2023, and July 7, 2023, passed by the Hon’ble Supreme Court directing that the award in favour of the decree holders is executed in its entirety,” it said.

On May 22, SpiceJet said it will seek a refund of ₹450 crore out of the total ₹730 crore paid to the airline’s former promoter Mr. Maran and KAL Airways following the Delhi High Court ruling.

The case dates back to early 2015, when Mr. Singh, who owned the airline earlier, bought it back from Mr. Maran after it was grounded for months due to resource crunch.

As part of the agreement, Mr. Maran and KAL Airways had claimed to have paid SpiceJet ₹679 crore for issuing warrants and preference shares.

However, Mr. Maran approached the Delhi High Court in 2017, alleging SpiceJet had not issued convertible warrants and preference shares nor returned the money.