SpiceJet Faces $100 Million Financial Crisis

SpiceJet faces ₹512 crore debt

SpiceJet has failed to pay ₹135.3 crore in Provident Fund contributions for its employees between April 2020 and August 2023, according to a filing with the Bombay Stock Exchange. Additionally, the airline has not paid ₹220 crore in tax deducted at source (TDS) from staff salaries during the same period.

Furthermore, SpiceJet is involved in disputes over approximately ₹72 crore in TDS and ₹84.5 crore in Goods and Services Tax (GST), alongside significant amounts owed in service tax (including interest) and customs duties (including delay penalties). The disputed TDS amounts date back to the assessment years 2009/10 to 2013/14, with GST issues covering July 2017 to March 2019. The oldest dispute involves ₹1.71 crore in service tax from April 2006.

NDTV has contacted SpiceJet for a comment, and the report will be updated once the company responds.

The non-payments and disputes stem from SpiceJet’s “constrained financial position,” which was highlighted last month when the airline made the “difficult decision” to place 150 cabin crew members on unpaid leave for three months.

SpiceJet aims to raise ₹3,000 crore by selling securities to qualified institutional buyers, with a set floor price of ₹64.79 per share. The airline noted that it may offer a discount of up to five percent of the floor price, pending shareholder approval, if deemed appropriate.

The funds raised will be used to address statutory dues, including those mentioned earlier, and to settle “certain outstanding liabilities” owed to creditors, including aircraft and engine lessors, as well as to cover employee wages and airport fees, according to the airline’s statement to the stock exchange.

Additionally, SpiceJet recently announced that Carlyle Group’s commercial aviation unit would write off ₹4 crore in lease arrears and convert ₹3 crore into equity.

SpiceJet plans to allocate ₹601.5 crore towards clearing statutory dues, with ₹297.5 crore for TDS liabilities and ₹156.4 crore for overdue Provident Fund contributions. Additionally, ₹150.3 crore will go toward airport-related fees. The majority of the funds will be used to settle outstanding debts to aircraft and engine lessors, engineering vendors, financiers, and for the maintenance of its current fleet.

Currently, 36 of SpiceJet’s 58 aircraft are grounded due to issues ranging from spare part shortages to optimizing resource usage. The airline intends to use part of the funds to bring 24 aircraft, including those from the B737 and Q400 series, back into operation.

SpiceJet’s active fleet has been reduced from 74 aircraft in 2019 to just 28 in 2024. The airline also plans to reserve ₹370 crore for the induction of new aircraft, signaling its strategy to recover by ungrounding planes, expanding its fleet, and competing more effectively in the highly competitive market.

SpiceJet’s shares dropped 5.23%, closing at ₹73.72 on the BSE on Tuesday.