SpiceJet shares hit 5% upper circuit despite operational challenges. What's behind the surge?

SpiceJet shares jumped 5% on Friday after the airline announced that its board would consider and approve a proposal to raise fresh capital at its meeting scheduled for November 18, boosting investor sentiment even as the company faces operational challenges.

The shares remained locked in the 5% upper circuit at Rs 8.67 apiece on the BSE on Friday. The company’s market capitalisation rose to Rs 1,323 crore following the announcement, triggering a spike in the share price despite crude oil prices rising above $95 per barrel and dragging peer IndiGo’s shares over 1% lower.

In an exchange filing on Friday, SpiceJet said its board would consider and approve the fundraising proposal at its meeting next Wednesday. The proposed fundraise could involve the issuance of equity shares, preference shares, debt securities or other permissible instruments through a preferential issue, qualified institutional placement (QIP) or any other mode.

SpiceJet runs into operational challenges

The fundraising plan sparked a sharp rise in SpiceJet’s share price even as the company continued to face operational challenges. Delhi's Indira Gandhi International Airport has cautioned passengers about possible flight disruptions involving the airline, advising travellers to check their flight status directly with the carrier before proceeding with their travel plans.

"Due to operational challenges being faced by SpiceJet Airlines, some flights may be impacted," the airport operator said.

Also read | Delhi airport warns of possible flight disruptions due to SpiceJet's operational challenges

Meanwhile, SpiceJet told The Economic Times that it is taking a “calibrated approach” to rebuild its capacity and strengthen its network, with improving aircraft availability and operational reliability among its immediate priorities. The airline’s capacity rebuilding efforts come against the backdrop of earlier reports of flight delays and cancellations, as well as questions over its operational capacity.

“Our immediate priority is to strengthen operational stability and build greater resilience into our schedules. We are working on improving aircraft availability, optimising resources and ensuring that operational issues are addressed as quickly as possible,” a SpiceJet spokesperson said.

SpiceJet’s on-time performance was reported at 16.6%, compared with 91.1% for IndiGo, 90.8% for Akasa Air and 81.7% for the Air India Group. The regulator calculates OTP across 10 major airports, including Delhi, Mumbai, Bengaluru, Hyderabad and Kolkata.

Also read | SpiceJet navigates turbulence with ‘calibrated’ push to rebuild capacity

SpiceJet’s domestic market share fell to 0.6% in September from 1.2% in August, according to data reported by PTI. IndiGo’s share, meanwhile, increased to 65.4% from 65%. Domestic air traffic across airlines declined 6.5% year-on-year to a little over 1.18 crore passengers during the month.

“As more capacity comes into the system, we expect to progressively improve schedule resilience, expand connectivity and offer passengers a more consistent travel experience in the weeks and months ahead,” the spokesperson said.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimershere.