Shares of SpiceJet, one of India's prominent airlines, have experienced a significant decline, plunging 17.31% and reaching a low of Rs 23.21 on the Bombay Stock Exchange (BSE). This marks the sixth consecutive day of falling share prices for SpiceJet. Over the six-day period, the stock has witnessed a staggering decline of 22.90%.
The recent decline in SpiceJet's shares can be attributed to investor caution ahead of the National Company Law Tribunal (NCLT) hearing scheduled for May 25. The hearing involves an insolvency plea filed by aircraft lessor Aircastle against the airline, which is seen as a major concern affecting SpiceJet's stock performance. Furthermore, bulk deals data released after market hours revealed that Nuvama Wealth Finance sold 68.40 lakh shares of SpiceJet at Rs 24.88 per share during the day. This is significantly higher than the two-week average volume of 28 lakh shares traded on the airline's counter. In total, 1.59 crore shares of SpiceJet were traded on that day.
The overall investor sentiment has also been negatively affected since Go First, another airline in the industry, filed for insolvency proceedings. These factors have contributed to the continued decline of SpiceJet shares.
As of March 31, SpiceJet's promoters held a 58.98% stake in the airline. However, out of this, 46.95% of the holding was either pledged or encumbered.
In an effort to recover, SpiceJet recently announced plans to bring back 25 of its grounded planes into service. The airline aims to have four grounded aircraft, including two Boeing 737s and two Q400s, back in operation by June 15. Additional planes are scheduled to return to service in the following weeks.
SpiceJet has also outlined plans for new flights, including two international UDAN flights on the Agartala-Chattogram-Agartala and Imphal-Mandalay-Imphal sectors, set to launch by the end of June. Furthermore, the airline plans to introduce a new UDAN flight on the Kolkata-Tezpur-Kolkata sector and resume flights on the Kolkata-Gwalior-Kolkata and Jammu-Gwalior-Jammu UDAN routes. Additionally, SpiceJet will initiate flights on the Kolkata-Agartala-Kolkata and Kolkata-Imphal-Kolkata sectors while resuming operations on the Kolkata-Chattogram-Kolkata sector.
In a similar scenario, Go First, headquartered in Mumbai, sent shockwaves throughout the global aviation industry when it applied for "voluntary bankruptcy resolution" with the NCLT on May 2. The company attributed its decision to technical glitches with next-generation engines supplied by Pratt & Whitney, leading to operational disruptions and mounting losses.
Numerous lessors from around the world have approached various Indian courts, including the NCLT, NCLAT, and the Delhi High Court, seeking the return of their leased aircraft. With recent developments, it is evident that the final legal battle will take place in the Supreme Court of India, as lawyers representing the affected leasing firms are expected to request an urgent hearing before a vacation bench of the apex court.
The decline in SpiceJet shares and the challenges faced by the aviation industry highlight the volatility and uncertainty in the market. Investors and industry observers will closely monitor the outcome of the NCLT hearing and the efforts of airlines like SpiceJet to revive operations amidst the current circumstances.