At the time of COVID-19 crisis, when many rating agencies and investors are sceptical about the survival of many airlines, HDFC Trustee Company Limited, a subsidiary of HDFC Mutual Fund, has said that it has bought 3.4 crore shares of SpiceJet, a domestic carrier from the open market. This accounts for 5.45 per cent stake in the private airline
“India’s biggest mutual fund buying a significant stake (in SpiceJet) shows that it has confidence in the airline coming out of the present crisis,” said an industry executive. Since last one year, the shares of the Ajit Singh-promoted carrier have nosedived.
According to a few industry observers, it is believed that GoAir and SpiceJet have been hit the worst due to the ban on international and domestic flights. This was because they don’t have the requisite cash flow.
For the aviation industry in general and specifically SpiceJet, the coronavirus crisis has hit hard on the financial front. Due to this, a lot is dependent on the soon-to-be-announced relief package from the government intended at supporting the sectors financially hit by the Coronavirus. In a recent report, it has claimed that due to the suspension of flights the aviation sector may incur losses of over $3 billion by Q1FY21.
According to the Centre for Asia Pacific Aviation, combined losses of $1.25-1.5 billion across FY20 and Q1 of FY21 cloud will be reported for Asia Pacific Aviation, IndiGo and SpiceJet, the two listed carriers. The pandemic impact will be so severe that smaller carriers may go bankrupt, it added.
However, it is said that SpiceJet is taking multiple measures to conserve its cash flow. It also said that in recent, its fleet of five dedicated freighters is crisscrossing the country daily and flying to nearby countries. These include those in the Middle East, South East Asia, among other places along with cold chain medical supplies, medicines, medical devices and other essentials to fight COVID-19.
