SpiceJet Ltd. is reducing liabilities and considering raising capital after the damage caused by Covid-19, and has agreed compensation from Boeing Co. for the grounding of 737 Max jets, Chairman Ajay Singh said.
The budget carrier, which suffered as Covid halted air travel in India, aims to cut liabilities by as much as $300 million over six months and raise funds from banks and potentially a warrants issue, Singh said in an interview in New Delhi.
“It will be a much cleaner-looking balance sheet than it was pre-Covid,” Singh said ahead of a 737 Max flight to Gwalior with India’s aviation minister and members of the media to celebrate the aircraft’s return to service.
Boeing’s Max jets were grounded worldwide in March 2019 following crashes in Indonesia and Ethiopia that killed 346 people. China aside, major markets including the U.S., Europe and India have allowed the planes to resume flying following extensive fixes.
Boeing compensated SpiceJet “both in cash and in kind” for the losses it suffered when the Max was grounded, Singh said, declining to specify an amount. SpiceJet had ordered 155 of the jets, with an option for 50 more. It was operating 13 when the plane was banned.
SpiceJet jumped as much as 7.5% to 84.40 rupees Tuesday in Mumbai.
The carrier, the first in India to operate a dedicated cargo fleet, is doubling down on the airfreight business, with plans to spin it off by Jan. 1, Singh said. SpiceJet is also in talks with Boeing to buy freighter versions of 10 narrow-body and 5-10 wide-body aircraft, he said.
“The cargo business is growing very rapidly and we are looking at all opportunities to raise funds to grow this business fast quickly, and that includes selling a stake,” Singh said. “We expect the valuation will be quite significant.”