SpiceJet investors banking on a bailout that secures their interest

In the past four trading sessions, shares of SpiceJet Ltd have risen by more than 21%, even as shares of its much larger rival InterGlobe Aviation Ltd, which runs India’s biggest airline IndiGo, have fallen about 4%. It does look like investors believe a bailout for the industry is on the way in some form.

As pointed out in this column earlier, InterGlobe Aviation had cash of ₹9,400 crore on its books as of end-December, based on which analysts say it can meet fixed costs even if revenues are hit for about six months. SpiceJet has no cash to speak of, which means that any bailout will benefit it the most.

An analyst tracking the sector says on condition of anonymity, that help is likely to come in way of credit guarantees given by the government to lenders. This is unlike what some governments are doing.