SpiceJet Shares Rise Nearly 3% Despite Pilot Salary Delays as Airline Seeks Government-Backed Loan

Mumbai, June 9: SpiceJet shares climbed about 2.6% on Tuesday even as a report highlighted the airline’s ongoing financial stress, including delays in pilot salary payments and efforts to secure a government-backed loan. Investors appeared to focus on the carrier’s plans to strengthen operations and expand capacity, helping the stock outperform despite concerns over its liquidity position. 

As of writing the stock was trading 2.6% higher at Rs 12.29. 

Pilots Face Months of Salary Delays 

According to a Reuters report, many SpiceJet pilots have experienced delays in salary payments since March as the airline grapples with a prolonged cash crunch. Internal communications reviewed by Reuters showed management acknowledging the difficulties faced by employees amid delayed disbursements, while pilots reportedly raised concerns about meeting day-to-day financial commitments.  

SpiceJet is flying against all odds as investors bet on operations stabilising ahead. Source: Google 

SpiceJet confirmed that salary payments have been delayed but said employee compensation is being released in phases. The airline added that a majority of employees had already received payments for March and that efforts were underway to restore normalcy.  

Government Loan Under Consideration 

The stock has fallen 60% this year so far. Source: Google 

As part of its efforts to stabilise operations, SpiceJet said it is pursuing funding under the government’s Emergency Credit Line Guarantee Scheme (ECLGS). The programme allows eligible airlines to access government-guaranteed loans with longer repayment tenures, providing much-needed liquidity support. 

The airline said it remains focused on improving cash flows and expects business operations to normalise over the coming months. Management attributed some of the recent financial pressure to higher fuel costs and operational disruptions linked to the Middle East conflict, which have affected airlines globally.  

Expansion Plans Offer Hope 

Despite its financial challenges, SpiceJet is taking steps to rebuild capacity and capture growing travel demand. The airline recently returned a Boeing 737 MAX aircraft to commercial service and finalised a lease arrangement for three Airbus A320 aircraft, which are expected to join its fleet in July. These additions are aimed at strengthening network capacity ahead of the busy travel season.  

The carrier currently operates a fleet of 21 aircraft and has indicated that expanding capacity remains a key part of its turnaround strategy. Investors appear to be betting that fresh funding and fleet additions could help improve operating performance over time.  

Long Road to Recovery 

SpiceJet’s financial troubles have been building for years. The airline, which commanded around 15% of India’s domestic aviation market in 2019, now holds a market share of roughly 3.4% as it continues to battle intense competition, elevated fuel costs and legacy liabilities.  

While the latest report underscores the scale of the challenges facing the carrier, Tuesday’s stock market reaction suggests investors are focusing on the possibility of a recovery supported by government-backed funding, capacity expansion and a gradual improvement in operations. However, the airline’s turnaround remains closely tied to its ability to secure fresh capital and restore financial stability. 

Source

•  https://www.nseindia.com/get-quote/equity/SPICEJET/SPICEJET-LTD