SpiceJet yet to receive approval from lenders for hiving off cargo unit

Even as Ajay Singh plans to hive off SpiceJet’s cargo business SpiceXperess by August, it is yet to receive approvals from its lenders. SpiceJet applied for the No Objection Certificate (NOC) over six months ago. However, sources said lenders do not seem to have clarity on the hive-off. “We have not been given any clarity yet. We do not see the hive off being completed by August,” said a banking source.

According to multiple sources, SpiceJet has received conditional approval only from YES Bank; however, it has not received approval from any of its other lenders. 

13/07/22 Business Line

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SpiceXpress to be hived off from SpiceJet by August first week

New Delhi: Banks and shareholders have given their approval to hive off cargo and logistics company SpiceXpress from SpiceJet airline and the bifurcation will be done by the first week of August, the carrier’s CMD Ajay Singh has said.

SpiceJet had on August 17 last year announced it was transferring its cargo and logistics services on a slump sale basis to its subsidiary SpiceXpress as it will allow the company to raise funds independent of the budget carrier and rapidly grow.

SpiceJet is under the regulatory scanner right now. Just five days ago, the airline was issued a show-cause notice by the Directorate General of Civil Aviation (DGCA) after its aircraft were hit by at least eight incidents of technical malfunction since June 19.

The DGCA — while stating that the budget carrier has “failed” to establish safe, efficient and reliable air services — gave it three weeks’ time to respond to the notice.

The airline has been making losses for the last four years. It incurred net losses of Rs 316 crore, Rs 934 crore and Rs 998 crore in 2018-19, 2019-20 and 2020-21, respectively.

In April-December period of 2021, the airline posted a net loss of Rs 1,248 crore.

However, the revenue from SpiceXpress has been increasing. In October to December period of 2021, SpiceXpress saw its revenue jump 17 per cent on a quarter-on-quarter basis to Rs 584 crore.

While talking to PTI last week, Singh said: “We have got the shareholders’ approval for that (hiving off SpiceXpress from SpiceJet). We have got the approval from our banks to do that. I think in the last phase... we should be done by the first week of next month.”

“It will be a separate company called SpiceXpress. It will be owned by SpiceJet but it will be a separate company,” he added.

While announcing the plan to hive off SpiceXpress on August 17 last year, the airline had said the logistics business has been valued at Rs 2,555.77 crore based on an independent valuation exercise carried out by the company and “the purchase consideration for the same shall be discharged by SpiceXpress by issuance of shares of SpiceXpress to SpiceJet, subject to all approvals as may be required”.

SpiceXpress has a network which spans over 68 domestic and over 110 international cities, including those in the US, Europe and Africa.

11/07/22 PTI/Telegraph

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