SpiceJet’s subsidiary cargo airline SpiceXpress will reportedly receive an investment of $100 million from a UK-based group. The airline has consistently made profits as the cargo market in India continues to expand post-COVID. SpiceXpress separated from SpiceJet recently, allowing it to independently attract investments like the latest one.
$100 million investment
SpiceXpress is set to receive an investment of $100 million from the UK-based SRAM & MRAM Group. The airline has even signed a Memorandum of Understanding (MoU) with SRAM & MRAM Group as part of the investment deal. SpiceJet, in a filing with the Stock Exchange, said,
“The MoU with SRAM & MRAM Group follows a restructuring agreement with aircraft lessor Carlyle Aviation Partner wherein the latter picked up a stake in SpiceXpress at an anticipated future valuation of $1.5 billion or Rs 12,422 crore.”
SpiceJet Chairman and Managing Director Ajay Singh is hopeful that the $100 million investment will help SpiceXpress’s further growth. He added that the latest development would help SpiceXpress provide a more streamlined and efficient service to its customers.
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The SRAM & MRAM Group is headquartered in the UK and has presence in several industries, including agricultural and agro‐food products, among others. The multinational conglomerate also has offices in Cambodia, South Africa, Indonesia, Malaysia, Bahrain, Georgia, India & Bangladesh. The Indian Express quotes the group’s chairman Dr Sailesh Lachu Hiranandani, as saying,
“We are pleased to join hands with SpiceXpress in its promising future and growth story. We see excellent growth opportunities in the logistics and cargo space in India.”
Independent decision
SpiceJet separated its passenger and cargo business by making SpiceXpress a separate cargo airline on April 1st. A significant consequence of this was that SpiceXpress became independent to raise funds on its own.
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Attempts to separate SpiceXpress from SpiceJet had been going on for months. Last year, SpiceJet received all the necessary approval from banks and shareholders to hive off its cargo business; it was initially expected to be completed by August 2022.
Following its separation from SpiceJet, SpiceXpress also saw aircraft trademarks, contracts, and all the rest transferred from the parent carrier. The deal also brought a one-time financial gain for SpiceJet of around ₹25 billion ($310 million) and reduced its negative net worth substantially.
However, recent reports say that SpiceJet continues to face financial trouble, with some of its aircraft facing requests for repossession under the Irrevocable De-registration and Export Request Authorisation (IDERA), a move that some lessors use in some instances, such as the default of a lease rental.
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Many are wondering if SpiceJet could also go under like Go First, but Ajay Sing continues to maintain that the airline has no plans to file for insolvency.
What are your views on this? Let us know what you think of the overall story in the comment section.
Source: With inputs from The Indian Express