Budget airline SpiceJet has successfully hived off its cargo and logistics arm SpiceXpress into an independent entity. With effect from 1st April 2023, both the companies can now raise funds individually. The separation is expected to help towards boosting the cargo business as well as put more focus on passenger services.
Subsequently, the SpiceXpress board will be working on raising fresh capital of up to INR 2,500 crore by issuing securities to qualified institutional buyers.
As reported earlier, SpiceJet’s Board of Directors had approved to convert its outstanding lease liabilities to aircraft lessor Carlyle Aviation Partners into equity. The same has been done with, and over USD 100 million have been restructured last month.
“The separation of our cargo and logistics arm is a stepping stone in our growth story which shall unfold in the times to come. SpiceXpress will provide greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth.”Ajay Singh, Chairman & Managing Director, SpiceJet
According to Singh, the separation will enable better operations for both companies and will help them work in complement with each other. Ultimately, the hive-off would strengthen SpiceJet’s balance sheet, wipe out a substantial portion of the company’s negative net worth and unlock significant value for the company and its shareholders.
SpiceJet operates a fleet of Boeing 737s, Q-400s and freighters. SpiceXpress and Logistics Private Limited is a subsidiary of SpiceJet Limited engaged in hassle-free cargo and delivery services.