It’s been eight weeks since India went into lockdown mode. It’s also one week since the government announced a mega ₹20 trillion economic package.
But despite waiting patiently, there is no help coming from the government for airlines.
Smaller airlines, such as SpiceJet Ltd, will be under far greater pressure. It had practically no cash to speak of before the lockdown. And its net worth was negative ( ₹850 crore in end-September 2019), owing to past losses. A two-month freeze on revenue has made things far worse. Varun Ginodia, an analyst with Ambit Capital Pvt. Ltd, said SpiceJet may well flounder. In essence, there will be little left for equity investors, even in a best-case scenario of a buyout. “In all likelihood, we believe SpiceJet will go down the Yes Bank way, leaving very little for equity investors. The only thing that can probably save SpiceJet now is an equity infusion from a large government-owned airline or a deep-pocketed private equity investor.”
