1SpiceJet Soars: NCLT Rejects Insolvency Petition, Airline Stock Rises

  • SpiceJet wins legal battle: NCLT dismisses insolvency petition by Wilmington Trust SP Services.
  • Challenges persist: Legal disputes with Aircastle, Celestial Aviation, and Alterna Aircraft.
  • Delhi High Court directive: SpiceJet ordered to settle USD 4 million payment to engine lessors by Feb 15.
  • Financial infusion: Bank balance boosted to over Rs 900 crore with governmental aid.
  • Strategic moves: Rs 744 crore raised in initial tranche of Rs 2,240 crore preferential capital infusion.
  • Investor confidence: FIIs raise stake to 0.33%, DIIs to 0.04% in December 2023.
  • Market performance: SpiceJet shares surge 4.68% to Rs 67.30; multibagger returns of over 110% in six months.


SpiceJet Gets Legal Relief: NCLT Denies Insolvency Petition :

SpiceJet, a famous Indian low-cost carrier, recently gained a substantial reprieve when the National Company Law Tribunal (NCLT) dismissed an insolvency petition filed against it by aircraft lessor Wilmington Trust SP Services. This ruling follows a similar outcome in December, when another lessor, Willis Lease Finance Corporation, suffered the same fate.

Disputed claims and legal manoeuvres :

The petition by Wilmington Trust SP Services stemmed from unpaid dues, but SpiceJet successfully challenged its legitimacy. The airline claimed that Wilmington served as a trustee for another lessor, Aircastle (Ireland) Ltd., rather than as an operating creditor. This technical reasoning was critical in the NCLT’s decision to dismiss the petition, providing SpiceJet with some relief in the midst of its financial difficulties.


Ongoing financial struggles :

Despite this court triumph, SpiceJet’s financial troubles continue. The airline is still in disagreement with several aircraft lessors, including Aircastle, Celestial Aviation, and Alterna Aircraft. Furthermore, a Delhi High Court order requires SpiceJet to make a USD 4 million payment to two engine lessors by February 15, threatening engine grounding in the event of default.

A Glimmer of Hope :

Despite these challenges, SpiceJet has managed to increase its bank balance to more beyond Rs 900 crore, thanks in part to government assistance under the Emergency Credit Line Guarantee scheme. This financial infusion could provide relief while SpiceJet works through its legal and financial issues.

Strategic Financial Moves :

Previously, SpiceJet raised Rs 744 crore in the first tranche of a Rs 2,240 crore preferential capital injection, with investors like Elara India and Carlyle Aviation participating. SpiceJet is seeking an extension to finish the remaining quota, and expects this investment to strengthen its expansion plans, increase financial resilience, and secure its position in the aviation sector.

Investor Interest and Market Performance :

SpiceJet Ltd, a prominent player in India’s domestic aviation industry, has a 13% market share and a market valuation of more than Rs 4,500 crore. In December 2023, Foreign Institutional Investors (FIIs) boosted their investment to 0.33 percent, while Domestic Institutional Investors (DIIs) grew theirs to 0.04%, indicating investor confidence despite current circumstances.

Market Reaction and Future Prospects :

SpiceJet Ltd’s share price rose 4.68 percent today, reaching an intraday high of Rs 67.30 a share from the previous close of Rs 64.29. Notably, the stock has achieved multibagger returns of more than 110% in six months, surpassing the BSE Small-Cap Index, which increased by 29%. Investors should keep a careful eye on this small-cap stock as it continues to grow.

SpiceJet aims to emerge stronger and more robust in the extremely competitive aviation industry by overcoming legal obstacles, increasing financial reserves, and gaining investor trust. As it plots its future direction, the airline’s performance will continue to shape its trajectory and industry perceptions.

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