SpiceJet’s flight to recovery: Can the airline engineer another turnaround?

Then came the Covid lockdown in March 2020. Passenger revenue collapsed overnight, while fixed costs, including lease rentals, maintenance, employee salaries, supplier payments, and regulatory dues, stayed. A sharp rise in ATF prices during FY22 further deepened the financial stress for airlines.

In FY20, SpiceJet reported a loss of Rs 937 crore, and its net worth turned negative at Rs 1,579.3 crore.

Fig 1: (Source: http://www.tradingview.com)

To stay afloat, SpiceJet slashed salaries, operated only its oldest jets, and pivoted to cargo via Spice Xpress. The company hauled 76,500 tonnes of critical supplies on 9,930 flights by October 2020, including Vande Bharat flights.

While domestic operations resumed in May 2020, subsequent Covid waves in March 2021 and January 2022 delivered fresh blows to air travel demand. The airline’s consolidated loss widened to Rs 1,744.3 crore in FY22, and its net worth declined further to Rs –4,288.3 crore.

High ATF prices, rupee depreciation, ransomware attacks, and governance lapses compounded the crisis.

Disputes with lessors resulted in at least 38 aircraft being grounded. As a result, the fleet shrank from 80 aircraft in FY22 to 41 in FY23.

Fig 2: (Source: Q1FY25 Investor presentation, SpiceJet Ltd)

Essentially, repeated lockdowns and low airline traffic led to a ‘liquidity crunch’, which led to a major part of the fleet remaining on ground.

Turning the corner (FY 2022-24)

Passenger air traffic in India surged from 105.4 million in FY22 to 190.5 million in FY23, though it remained below its pre-pandemic peak of 202 million in FY20.

SpiceJet’s revenue increased from Rs 5,171 crore in FY22 to Rs 8,874 crore in FY23, though it reported losses at Rs 1,512.9 crore.

In FY 24, the airline recorded a 90% load factor. High load factors are a sign of improving performance, if not profitability.

Fig 3: (Source: SpiceJet Ltd Annual Report – FY24)

In addition to improving load factors, the airline undertook several restructuring measures to improve balance sheet health and liquidity. These include:

SpiceXpress spinoff (Apr 1, 2023): The cargo business was hived off into a separate subsidiary, allowing SpiceJet to deleverage its balance sheet and simultaneously allow SpiceXpress to have a more focused management and strategy.

Capital infusion: In September 2023, SpiceJet announced that the promoter (through SpiceJet Healthcare Private Limited) would infuse Rs 500 crore (equity/warrants) at Rs 29.8/share. This included Rs 200 crore infused upfront in the form of equity allotment, while the remaining (warrants amounting to Rs 294 crore) was infused on 14 June 2025.

Fig 4: Source: SpiceJet Ltd Annual Report – FY24

In February 2024, the company raised Rs 636.5 crore from Domestic Institutional Investors (DIIs), family offices and HNIs at Rs 50/share.

Fig 5: Source: SpiceJet Ltd Annual Report – FY24

In September 2024, the company raised Rs 3,000 crore through a QIP (Qualified Institutional Placement) to FIIs and DIIs, including Goldman Sachs (Singapore), Morgan Stanley, and Societe General ODI at Rs 61.6 per share.

These capital infusions were utilised to clear past dues and unground the fleet.

SpiceJet continues to report operating losses despite significant capital infusion, lessor debt conversion to equity, and payment of statutory dues.

Fig 7: Source: http://www.screener.in

However, there has been a decline in the interest expense (primarily towards lessor debt) from Rs 507 crore in FY23 to Rs 291 crore in FY25. Depreciation also declined because of a lower fleet count.

PAT of Rs 61 crore (consolidated) is courtesy a gain on settlement of certain lease obligations, resulting in a Rs 538.7 crore non-cash gain reported as ‘other income’.

The cash flow, however, is anything but positive, and SpiceJet must increase its fleet size to reach operating profitability.

Fig 8

However, challenges remain. Despite significant capital raises, lessor settlements, and payment of outstanding dues to suppliers and vendors, the fleet size has reduced from 35 in FY24 to 22 in Q4FY25.

Fig 9: Source: Q1FY25 Investor presentation, SpiceJet Ltd

According to the company, the reduction in fleet size was due to two main factors: the return of aircraft previously on ‘wet lease’ — short-term leases that include crew, maintenance, and insurance, but come at a high cost — and delays in the delivery of company-owned engines from Aircraft MROs (Maintenance, Repair & Overhaul), which were originally expected by April 2025.

As a result of the delay, the overall fleet size temporarily decreased. However, with over 15 engines, including two received in July 2025, expected to be gradually added back, SpiceJet could soon see a significant increase in its operational fleet.

According to the company’s Q4FY25 investor presentation, the airline plans to reach 52 operational aircraft by December 2025.

Fleet additions will remain a key monitorable.

Fig 10: Source: Q4FY25 Investor presentation, SpiceJet Ltd

On July 25, SpiceJet also announced the addition of five new Boeing 737 MAX aircraft, expected to join the fleet in October 2025.

For SpiceJet, the following sequence of events suggest an improving outlook:

• On March 17, promoters infused Rs 294 crore, converting warrants into equity.
• On March 26, SpiceJet announced 24 new domestic flights for 2025. It added three new destinations: Tuticorin, Porbandar, and Dehradun.
• On March 27, it announced yet another settlement with Willis Lease finance corporation. As part of the settlement Willis Lease will withdraw its insolvency proceedings against the company. This is one of the lessor settlements the airline has reached over the last three years.
• On June 14, the airline announced restructuring of $121 million lease debt via equity issuance at Rs 65/share (subject to shareholder approval).
• On July 3, SpiceJet reported that first two of 17 Overhauled Engines have been delivered by StandardAero. It also successfully ungrounded another Boeing 737 NG.
• On July 24, the company announced that Rs 1,300 crore damages filed by the erstwhile promoter, KAL Airways and Kalanidhi Maran, have been disposed of by the Supreme Court.
• On July 25, it informed that it is adding another 5 Boeing 737 Max to its fleet.

Valuation

While there is currently no consistent operating profit to base a valuation multiple on, the intent is clear: over Rs 4,000 crore in capital has been infused over the last two years, with promoters contributing Rs 200 crore in FY23 and Rs 294 crore in FY25.

SpiceJet has settled almost all of its lessor debt, settled airport charges and other statutory dues, and has paid off salaries to employees. Of the 15 engines expected to be added back to the fleet, it is likely to see a steady flow over the next few quarters.

Whether this translates into improving profitability remains to be seen.

Note: We have relied on data from http://www.Screener.in and http://www.tijorifinance.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.

Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors. He has also worked at an AIF, focusing on small and mid-cap opportunities.

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