HC asks SpiceJet to deposit Rs 243 cr in share transfer row with K Maran

 The Delhi High Court on Monday asked cash-strapped airline SpiceJet to deposit within six weeks an additional Rs 243 crore in connection with a share-transfer dispute with ex-promoter Kalanithi Maran, owner of Sun group.

Maran has the right to seek status quo on SpiceJet’s shareholding if the amount is not deposited within the deadline, meaning the company won’t be able raise new capital from the market through issuance of fresh shares or stake sale.

The amount is the interest payable on Rs 579 crore, which the court in 2017 had asked SpiceJet to deposit as part of the share transfer dispute. SpiceJet had deposited the entire amount through a bank guarantee of Rs 329 crore and a deposit of Rs 250 crore.

SpiceJet’s net worth has eroded completely and it will find it difficult to deposit to deposit the amount, as the coronavirus pandemic hurts revenue of airlines. The company’s negative net worth at the end of March 31 stood at Rs 1,580 crore and cash balance at mere Rs 42 crore ,while liabilities like lease rentals, payment to suppliers are accumulating.

The company’s stock fell by 3.26 percent after the court order.

“Judgement Debtor (in this case SpiceJet and promoter Ajay Singh) is hereby directed to deposit a sum of Rs 242.93 crore as post-award interest sum within a period of six weeks. In the event the amount is not deposited, the Decree Holder(in this case Kalanithi Maran and his firm KAL Airways) shall be at liberty to seek directions to maintain status quo with respect to shareholding of SpiceJet Limited and Ajay Singh,” said the court.

The case relates to a dispute arising out of non-issuance of warrants in favour of Maran, after transfer of ownership to Ajay Singh, the controlling shareholder of SpiceJet.

Maran had sold his entire 58.46 per cent stake, amounting to 350.4 million shares in SpiceJet to Singh for a nominal Rs 2 in 2015, after a financial crunch led to a change in ownership of the airline.

The two sides have been locked in litigation since then, with Maran accusing SpiceJet and Singh of breach of agreement for not issuing him 189 million share warrants and preference shares, despite his Rs 6.79 billion infusion. He claimed Rs 1,300 crore from SpiceJet and Singh.

The warrants, if converted into equity, would have given Maran and his KAL Airways a 24 per cent stake in the airline. SpiceJet contends shares could not be issued as, it did not get the BSE exchange’s approval. In July 2018, an arbitration tribunal ruled in SpiceJet's favour, rejecting the Maran’s Rs 1,300 claim for loss on account of non-issuance of share warrants.

However, Maran will be entitled to a refund of Rs 579 crore, the subscription amount he made for warrants and preference shares.

SpiceJet designated 'Indian scheduled carrier' to operate flights to the US

Budget carrier SpiceJet on Thursday said it has been designated as the "Indian scheduled carrier," to operate flights to the US.
SpiceJet would be the first Indian budget carrier to operate services to the United States.

Currently, only the national carrier Air India is operating flights on India-US routes.
In a regulatory filing, SpiceJet said it has been designated as an Indian scheduled carrier to operate on agreed services between between the two countries.
This has been done in terms of the Air Services Agreement between India and the United States, the filing said.
All international commercial air passenger services are suspended since March 22, in the wake of travel restrictions due to the coronavirus pandemic.
Shares of SpiceJet were trading at 49.75, up 4.85 per cent over its previous close on the BSE.

SpiceJet, Emirates sign codeshare agreement for flight ticket bookings

SpiceJet on Monday said it has signed a codeshare agreement with Emirates that will allow passengers of the Dubai-based airline to book tickets on the Indian budget carrier using Emirates' ticketing system from early 2020.
"The codeshare agreement means travellers from across the globe can book a single ticket with attractive fares to any of Emirates' nine points across India and connect onwards to 172 domestic routes that are part of SpiceJet's network," the Indian budget carrier said in a press release.

While passengers of Emirates will be able to access the SpiceJet network first from early 2020, SpiceJet passengers travelling from India to Dubai will also be able to access Emirates' expansive network later, opening up multiple international connections for them.
Read our full coverage on Em

IndiGo and SpiceJet to shift operations to Delhi's terminal 3 from Sept 5

The Delhi airport on Monday said that SpiceJet SpiceJet and IndiGo airlines would shift their flight operations to T3 terminal from September 5 due to expansion works at T2.
"SpiceJet to shift its operation from T2 to T3 entirely; while IndiGo to partially move its operation from T2 to T3...This will result in the passenger load at T2 to reduce by 27 per cent," Delhi International Airport Limited (DIAL) - which operates the Delhi airport - said in a press release.

The movement will take place with effect from 00:01 hours on September 5.
IndiGo 5000 series flights will shift to T3 terminal.
GoAir will continue its domestic operations from T2 terminal.
Post completion of infrastructure enhancement at T2, the terminal will be able to handle 18 million passengers per annum (MPPA), up from current 15 MPPA, the DIAL said.
At present, GoAir fully and SpiceJet and IndiGo partially operate their domestic flights from T2 terminal.
Air India, Vistara and Air Asia India operate completely out of T3 terminal.
The revamped Terminal 2 was opened in October 2017, which saw partial shifting of flight operations of SpiceJet and IndiGo, and complete shifting of GoAir from Terminal 1.

SpiceJet posts highest Q1 profit at Rs 262 cr on compensation from Boeing

Low-cost carrier SpiceJet, which was on the verge of shutting down in 2015, posted its highest profit at Rs 261.7 crore in the April to June quarter, though a compensation of Rs 114.1 crore has helped. The airline claimed this compensation amount from Boeing for the grounding of 13 737MAX aircraft, which was disputed by the company’s auditor.
“We draw attention to the statement, regarding recognition of other income. In our view, there is no virtual certainty to recognise such other income, as required by accounting standards of Ind-AS 37. Had the company not recognised such other income, profit for the quarter would have been lower and accumulated losses as on June 30, 2019, higher by Rs 1,141.4 million (Rs 114.14 crore),” the company’s auditor S R Batliboi & Associates stated, indicating that discussions with Boeing on the compensation amount hasn’t been finalised yet.

Chief Financial Officer Kiran Koteshwar, however, said the company would receive a higher compensation but it had accounted only for Rs 140 crore as it was certain about getting that amount as lease rental payment to lessors.
“This is a compensation which is a no brainer as this is already sitting on my books. As a listed entity, I didn’t give any guidance to my investors for compensations on the other items which I am still not certain of,” Koteshwar said. He was replying to a query on whether it was proper to factor in the compensation, which the carrier is yet to get.
US plane maker Boeing has disclosed an amount of $4.9 billion as payment to customers, including compensation to airlines for the grounding and delayed deliveries of 737MAX aircraft.
Koteshwar argued that the company continued to incur expense on the grounded aircraft without generating any revenue. ‘’I have a contractual obligation with the lessors, airports, crews to pay them irrespective of the grounding. Then there are maintenance costs. The profit reported for this quarter is an operational profit in a true sense as the company should not consider the expenses on 737MAX as they are not revenue generating,” he said.
Chart He, however, refused to give a guidance on the amount of total compensation, saying the discussions were still going on and the amount could change depending on the duration of the grounding. Boeing, which had previously told SpiceJet that the 737MAX would be back in the air by July, has now told the airline that the plane may not fly before the end of this year, Koteshwar said. Any further delay may force the airline to cancel the order, he added. “If there is no capacity addition, that airline will be pushed into a corner. As an organisation, we may have long-term relationship with Boeing, but if the aircraft doesn’t come in the next 8-10 months, the airline will be forced to look beyond for a new order,” he pointed out. SpiceJet has also been forced to trim its capacity induction because of the delivery delay.
The airline in March had said that it was looking to add 60 planes in FY20 but now has a forecast of adding only 10-15 planes till October, including five to 10 Boeing 737 NG aircraft and three 90-seater Q-400.
The addition will be a mix of dry and wet lease. Wet lease is costlier and pushes up an airline’s expense, but Koteshwar said it was necessary to cater to the growth in traffic. “The third quarter is usually a peak quarter and because we don’t want to lose on traffic, we may take some on wet lease. Those will be for shorter period of around six months,” he said. Also, it will be easier to replace the aircraft on wet lease as and when the delivery of 737 Max resumes.
“SpiceJet reported better than expected numbers driven by higher fares but there’s some sharp jump in costs (fuel, employees and other expense) mostly due to induction of Jet Airways fleet and crew. Arresting the rise in cost, post induction of the Jet fleet, will be very important,” Ansuman Deb, who tracks airlines for brokerage firm ICICI Securities, said in a note.

Taxation imbalances in aviation sector need to be corrected: SpiceJet chief

Asserting that Indian aviation sector has terrific potential, SpiceJet chief Ajay Singh has said imbalances in regulatory and taxation structure need to be corrected for the sector, which can be a bright spot of the economy.
Singh, who has helmed the turnaround of the once ailing low cost carrier, said big bold reforms and more out of the box thinking can be expected from the government.

"If there was any government which has will and political strength, then it is this government. Aviation can be one of the bright spots of the economy ... Some wonderful work has been done, if you see UDAN scheme and other initiatives," Singh told PTI in a recent interview on the sidelines of an IATA event here.
Ude Desh ka Aam Nagrik (UDAN) or regional air connectivity scheme was launched in the first term of Prime Minister Narendra Modi-led government as part of efforts to make flying more affordable as well as connect unserved and under-served airports. Various other initiatives were also taken up during the first term to bolster the aviation sector.
After being one of the fastest growing domestic aviation markets in the world, passenger traffic growth turned negative in April, mainly due to crisis at Jet Airways. The full service carrier shuttered operations in April.
"In aviation, we need to get our cost structure right, ATF under the GST, build India into a global aviation hub. Aviation can be a great employer of people and has terrific potential. We need to think big.
"We have the opportunity to be the service centre of the world for aviation. We need to correct the imbalances that exist in our regulatory and taxation structure," Singh said.
The airline industry has been pitching for bringing Aviation Turbine Fuel (ATF) under the Goods and Services Tax (GST). Jet fuel accounts for more than 40 per cent of an airline's operational cost.
Earlier this month, global airlines' grouping IATA's chief Alexandre de Juniac said developing markets are expected to provide the majority of additional passenger demand.
"India and China alone are forecast to account for around 45 per cent of all additional passenger trips over the next two decades. Even more than today, the travellers of the future will come from all walks of life and economic means," he had said.
According to Singh, it is wonderful that the country has a strong and stable government for the next five years.
"I believe that the government will focus hard on promoting economic growth and employment. You will see big bold reforms and much more out of the box thinking at much higher pace. I think this government has the political strength and the political will to do it," the SpiceJet Chairman and Managing Director said.

SpiceJet to hire up to 2,000 Jet staff, including pilots and cabin crew

SpiceJet plans to hire up to 2,000 staff, including pilots and cabin crew, of the defunct Jet Airways as the no-frills carrier continues to expand its operations.
The airline has taken at least 22 planes that were earlier used by Jet Airways, which temporarily shuttered its operations due to cash crunch in April.

"We have taken significant number of people from Jet Airways. They were well qualified ad professional people. We will continue to take more Jet staff in the times to come.
"We have taken around 1,100 people so far. Expectation is that we will go up to 2,000 people. It will be pilots, cabin crew, (people) from airport services, security...," SpiceJet Chairman and Managing Director Ajay Singh told PTI in an interview.
Currently, SpiceJet has around 14,000 staff and a fleet of 100 planes. It is the fourth airline after Air India, now defunct Jet Airways and IndiGo to have 100 aircraft.
SpiceJet has Boeing 737s, Bombardier Q-400s and B737 freighters. It operates around 575 daily flights on an average to 62 destinations, including nine international ones, he said.
To a query on whether SpiceJet would look at operating wide-body aircraft that were earlier used by Jet Airways, Singh said the airline is right now focussed on narrow-body fleet.
"Having said that we recognise that there are gaps which have been created. They need to be filled and in the longer term, if India is to be a global aviation hub, Indian carriers will have to fly long haul. It can't be only Air India which flies long haul. The models (of business) for us may be different... I am sure every carrier is trying to see what can be done," he said on Saturday.
On May 28, SpiceJet posted a 22 per cent rise in net profit to Rs 56.3 crore in the three months ended March as higher fares helped the airline amid a capacity crunch in the domestic aviation market.
Singh said there is no plan to raise funds at the moment, adding that the airline is quite comfortably placed in terms of finances.
"We are going to expand 80 per cent capacity this year (fiscal). A lot of the capacity is being expanded through the leasing route. Therefore, it may not require huge amount of cash and this year we also expect to be significantly profitable. Also, get significant cash flow through sale and lease back. So, we think that we probably don't need to dilute any equity," he noted.
The airline is looking to have an 80 per cent capacity expansion in terms of Available Seat Kilometre (ASK), an indicator of seat capacity.
"We have very little debt in the company and the debt relates to Q400s we have on our books for the most part. We are in a healthy situation that we have a very low debt," Singh said.
In 2015, SpiceJet placed a USD 22 billion order for 205 aircraft with Boeing and had followed it up with a USD 1.7 billion order for 50 Bombardier Q400 planes.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

SpiceJet hires 500 Jet Airways pilots and employees, may induct more

Budget carrier SpiceJet Friday said it has already absorbed over 500 employees, including 100 pilots, of the grounded carrier Jet Airways and it is open to induct more as it adds more aircraft and routes in the times ahead.
The Gurugram-based no-frills airline has already announced induction of 27 more planes -22 Boeing 737s and five turboprop Bombardier Q400s - in the fleet to help overcome to an extent the capacity deficit due to Jet Airways temporarily withdrawing its domestic and international services.

SpiceJet chairman and managing director Ajay Singh in a statement Friday said that his carrier is giving "first preference" to Jet Airways staff in recruitment.
ALSO READ: Jet Airways' troubles could be blessing in disguise for SpiceJet
"As we expand and grow, we are giving first preference to those who have recently lost their jobs due to the unfortunate closure of Jet Airways," Singh said.
He said that SpiceJet has already provided jobs to more than 100 pilots, over 200 cabin crew and 200 plus technical and airport staff recently.
"We will do more. We will also induct a large number of planes in our fleet soon," Singh added.
The carrier Thursday announced the launch of 24 new flights connecting Mumbai & Delhi with 16 services connecting Mumbai and four Delhi while the remaining four connecting the two metros. These flights are set to be rolled out between April 26 and May 2.
ALSO READ: SpiceJet spreads wings, will add five more 90-seater Bombardier Q400s
Earlier this week, the carrier said it will connect Mumbai to a host of international destinations with direct non-stop flights to Hong Kong, Jeddah, Dubai, Colombo, Dhaka, Riyadh, Bangkok and Kathmandu, starting May-end.
"SpiceJet is making all possible efforts to minimise passenger inconvenience and serve Indian customers who are finding it difficult to get seats in this busy season," Singh added.

SpiceJet in talks to lease other aircraft after India grounds 737 MAX fleet

SpiceJet Ltd said on Friday it was in talks will lessors globally to induct aircraft, in an effort to fill a gap after the grounding of its MAX fleet.
The airline was forced to ground its 12 Boeing Co 737 MAX 8 planes by India’s aviation watchdog due to safety concerns after an Ethiopian Airlines plane crash that killed 157 people earlier this month.

The low-cost carrier could also benefit from cash-strapped Jet Airways being forced to ground planes, and is in talks with lessors to lease some of those aircraft, a person with direct knowledge of the matter had told Reuters earlier this week.

SpiceJet to diversify into freighter service with modified Boeing 737

Ajay Singh-owned SpiceJet is diversifying into the air cargo business, and will be the first among Indian airlines to start a dedicated freighter plane service. The airline, which will be using Boeing 737-800 BCF for freighter operations, will get its first plane in July.Ajay Singh-owned SpiceJet is diversifying into the air cargo business, and will be the first among Indian airlines to start a dedicated freighter plane service. The airline, which will be using Boeing 737-800 BCF for freighter operations, will get its first plane in July.
“We plan to start operations by July between the metro cities. Gradually we will be spreading the business to other cities including international destinations,” a senior SpiceJet official said.
ALSO READ: SpiceJet keen to run sea planes in Odisha to connect tourist hotspots
Sources said that retrofitting work in aircraft is underway at Boeing’s facilities in Shanghai and at Israel Aerospace Industries. “Two planes have already undergone conversion and will be joining our fleet by third week of July,” the Spicejet official said. The airline plans to have 20 freighter planes by 2022.
Through its freighter conversion program, US aircraft manufacturer Boeing transitions passenger airplanes into freighters. “The seats of the plane are removed creating space for cargo. Modifications also include installing a large main-deck cargo door, a cargo-handling system and accommodations for up to four non-flying crew members or passengers.
The 737-800BCF carries load of upto up to 23 tonnes and has a range of 2,000 nautical miles (3,750 km) which according to SpiceJet will help them to venture in new international markets. “The international destinations are still in planning stage but certainly we will expand gradually,” the official said.
The 737-800BCF freighter also offers operators newer technology, lower fuel consumption and better reliability than other standard-body freighters.
ALSO READ: SpiceJet hits 11-month low; down 21% in one month
A boost in e-commerce sales has increased the prospect of air cargo business in India. But while logistics pure play cargo players like Blue Dart operates six dedicated freighter planes, most of India's air cargo capacity is limited to belly space in commercial airlines, all of which are seeing a surge in cargo income.
The largest Indian airline, IndiGo, which operates 153 A320 planes, earned Rs 8,761 million from cargo operation in FY 16-17. Rating agency Icra said in a recent report, that air cargo volumes are expected to grow by 60 per cent over the next five years.
"Growing e-commerce, improving air connectivity across small airports in the country and growth in GDP are expected to result in growth in air cargo traffic. Infrastructure bottlenecks remain a major constraint to the growth prospects of air cargo and the same need to be addressed," Icra sector head for corporate ratings, Harsh Jagnani, said.
However, sector analysts warned that SpiceJet’s diversion may be a costly affair at a time when airlines are tackling the dual problem of a high fuel price and weaker currency. “Freighter business is a very tough sector, it’s extremely seasonal and logistics company like FedEx, Blue Dart which have expertise in such business makes life tougher. Getting into captive model with major e-commerce players like Amazon and Flipkart will help,” said an airline executive.
Veterans of the air cargo industry said that SpiceJet will initially face the hurdle to fill up space as other than high value items, the road and water mode is preferred. “Filling up space will be a challenge. Business between India and the neighbouring countries is not so robust to support dedicated freighter operations,” an executive of a air cargo company said.

SpiceJet inks $12.5 billion deal with Safran for aircraft engines

SpiceJet has finalised $ 12.5 billion contract for LEAP-1B engines to power its fleet of 155 Boeing 737 Max planes.

The agreement which covers ten-year rate per flight hour agreement and spare engines was signed on Saturday on the sidelines of French president Emmanuel Macron's India visit. LEAP-1B engines are manufactured by CFM International, a part of Safran group of France and are the sole engine variant for the 737 Max planes.

Last January, the airline ordered Boeing 737 Max planes in $ 22 billion deal. SpiceJet expects to receive the first aircraft from the order in August and another 14 by next April.

Under the terms of the agreement, CFM guarantees maintenance costs for all SpiceJet’s LEAP-1B engines on a pay by hour basis.

"We are looking forward to introducing the new LEAP-1B into our fleet,” said Mr Ajay Singh, Chairman and Managing Director, SpiceJet. “The CFM56 engines we currently operate have been a highly valued asset for us over the years. From what we have seen so far, the LEAP-1B is living up to its promises for efficiency and reliability. We hope they provide us unmatched service reliability while keeping our costs in check to ensure profitable operations.”

Philippe Petitcolin, CEO of CFM parent company Safran Group. “It has been exciting to watch this airline grow over the years and we believe it has a very bright future

SpiceJet records highest ever quarterly profit at Rs 2.4 billion in Q3

Low-cost carrier SpiceJet on Wednesday reported a 32 per cent rise in its net profit at Rs 2.4 billion for the three months ended December 2017, aided by higher passenger revenue, making it the 12th successive profitable quarter for the airline.
The company had reported a net profit of Rs 1.81 billion in the same period a year ago.
"12 successive profitable quarters, record aircraft orders, industry's best load factor, high on-time performance and constantly exploring new growth avenues SpiceJet remains firmly on track on its long-term growth strategy," SpiceJet CMD Ajay Singh said.
The total income from operations of the company stood at Rs 20.8 billion for the December quarter of 2017, while in a year-ago period, it stood at Rs 16.4 billion, a company release said.
"The strong quarterly results were aided by a higher passenger load factor and a healthy increase in passenger yields despite a substantial rise of 17 per cent in crude oil prices, a one-time expense of Rs 250 million and an inflationary increase of 3 per cent in other costs," the release added.
The company witnessed a 14 per cent increase in its passenger yields (revenue per available seat kilometer) while its average domestic load factor was 95 per cent.
The shares of the company were trading at Rs 138.30, up 6.92 per cent on the BSE.