SpiceJet shares have attracted attention with a notable rise following the airline’s announcement of clearing ₹160.07 crore in employee provident fund (PF) dues. This significant development was made possible by funds raised through a ₹3,000 crore Qualified Institutional Placement (QIP).
Clearing these long-standing dues marks an important step for the airline, which has been working to overcome financial challenges in recent years.
SpiceJet, India’s budget carrier, has been under pressure to resolve a series of financial issues, including unpaid employee PF dues that have been pending for over 2 years. On December 13, 2024, the airline announced that it had cleared these dues, amounting to ₹160.07 crore, with funds raised through the ₹3,000 crore QIP.
The QIP, which is a fundraising mechanism that allows companies to issue shares to qualified institutional buyers, has been critical in enabling SpiceJet to meet its statutory obligations. The funds were used not only to clear PF dues but also to settle employee salaries, tax deducted at source (TDS), and Goods and Services Tax (GST) liabilities.
The announcement had an immediate positive impact on SpiceJet shares. On December 13, the SpiceJet share price surged over 5% from its intraday low, reaching ₹58.44 on the Bombay Stock Exchange (BSE) by 2:45 PM. This marked a 1.12% increase, or ₹0.65 higher than the previous day’s close. By the end of the trading day, SpiceJet shares settled at ₹58.59, recording an overall gain of 1.38%.
The company’s ability to clear such significant dues has reassured the market and investors, further enhancing the appeal of SpiceJet shares. The QIP has not only helped clear these pending dues but is also expected to help the airline save on interest payments, contributing to an overall improvement in its balance sheet.
In addition to clearing financial dues, SpiceJet has been working on resolving several legal issues. The airline had been embroiled in disputes with aircraft lessors, vendors, and suppliers over unpaid dues. SpiceJet also faced contempt notices from the National Company Law Tribunal (NCLT) and Delhi High Court, which were adding to its legal woes.
However, with the clearance of these dues and the resolution of disputes with lessors and creditors, SpiceJet’s financial standing has significantly improved.
SpiceJet’s journey over the past few years has been filled with financial struggles, including a declining market share. As of June 2024, the airline’s market share had dropped to 3.8% of the domestic aviation market, compared to 4.4% in June 2023 and 15.6% in June 2019.
Despite these challenges, the recent settlement of dues and the successful ₹3,000 crore QIP raise a glimmer of hope for the airline’s future. With its legal and financial issues on the path to resolution, SpiceJet is now better positioned to focus on its operations and growth.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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