SPICEJET’S STOCK TAKES OFF AS GANGWAL CONSIDERS INCREASING STAKE

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SpiceJet Share Prices Surge on News of Potential Investment by Co-founder of IndiGo

The shares of SpiceJet witnessed a substantial rise on Friday, driven by reports suggesting Rakesh Gangwal, the co-founder of IndiGo, is considering acquiring a significant stake in the airline. The SpiceJet stock experienced a notable rally of 19.39%, increasing by Rs 7.08 to close at Rs 43.60 on the BSE, reaching a 52-week high of Rs 43.82.

The buzz surrounding this development was generated by an ET Now report, indicating that the Gangwal family is engaged in advanced discussions with the airline, exploring the possibility of acquiring a substantial stake. However, the exact size of the potential purchase remains undisclosed at this stage, considering that the current promoters, led by Ajay Singh, own 56.53% of SpiceJet.

The airline has faced challenges due to the grounding of nearly half of its fleet, primarily as a result of ongoing legal disputes. Aircraft lessor Celestial Aviation, an operational creditor, has initiated insolvency proceedings against the airline, claiming a default of $29.9 million for nine aircraft. Other lessors, such as Willis Lease Finance, Aircastle, and Wilmington, have also filed pleas to initiate insolvency proceedings against SpiceJet at the National Company Law Tribunal (NCLT).

In recent developments, the NCLT has suggested that SpiceJet settle these cases with the lessors. It was informed that SpiceJet and Celestial Aviation are currently in advanced stages of negotiating a settlement, with a hearing scheduled for November 7.

While the outcome of the discussions with the Gangwals remains uncertain, an infusion of funds would be a positive development for the airline. This comes at a time when the aviation sector’s short to medium-term prospects look promising, with one player still unable to commence operations.

The Gangwal family had recently divested part of their stake in IndiGo, with Shobha Gangwal, Rakesh Gangwal’s wife, selling nearly 2.99% of InterGlobe Aviation, the parent company of IndiGo, for Rs 2,802 crore through open market transactions in August. In February, Shobha Gangwal sold a 4% stake in the company for Rs 2,944 crore. Additionally, in September of the previous year, Rakesh Gangwal and Shobha Gangwal divested 2.74% of the airline for Rs 2,005 crore.

In a separate development, Akasa Air has announced that it is resuming its growth trajectory. The airline plans to operate to various domestic and international destinations in the current fiscal year after receiving several additional aircraft.

Akasa Air faced challenges recently due to pilot resignations. The airline disclosed that a “small set of pilots abandoned their duties and left the organization without serving their mandatory contractual notice period” in the July-August 2023 period, resulting in several flight cancellations. However, the airline has since optimized its network to ensure the highest levels of operational reliability, as it did during the first 11 months of its operation.

Akasa Air reaffirmed its financial strength, growth-oriented approach, and commitment to establishing a durable and reliable airline for the long term.

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