India's low-cost carrier SpiceJet plans to raise $250m

India's low-cost carrier SpiceJet plans to raise $250m

Visual from SpiceJet website

Indian low-cost carrier Spicejet plans to raise $250 million in the next two months in a new funding round, Chairman Ajay Singh told the CAPA India Aviation Summit on Wednesday.

SpiceJet had announced three fundraises in 2023 to help clear unpaid dues and restore its fleet as it looked to return to full capacity and struggled to repay leasing companies.

It has raised at least 7.44 billion rupees ($89.2 million) since then, according to an exchange filing from January.

The company has reached settlements over the last few months with multiple leasing companies, including AerCap, the world’s largest aircraft lessor.

Singh did not specify the method of SpiceJet’s fundraise or for what it would raise capital.

He also called for aviation turbine fuel to be brought under the goods and services tax.

“(The government) can’t keep taxing aviation as a rich man’s product and expect low-cost services,” Singh said at the summit.

Aviation turbine fuel is currently taxed under the Central Excise Act and accounts for a large swathe of airlines’ costs.

“(We) hope the new government won’t be as bureaucratic as in our past experiences,” Singh said.

Analysts said the fuel being taxed under goods and services mandates could reduce its weight as a cost on airlines.

Value Added Tax on jet fuel has been reduced by all states except five, which account for a significant portion of air traffic.

CAPA India CEO Kapil Kaul said he expects states holding out on tax cuts on jet fuel would rationalise taxation in the financial years 2025 or 2026.

India imposed a windfall tax on aviation fuel in July 2022 to regulate private refiners that wanted to sell fuel overseas instead of locally but removed it in January.

Reuters

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