SpiceJet Stock Rises For Third Day Even As Legal And Financial Stress Mounts

SpiceJet shares stayed in focus on Friday as the airline’s stock hit the upper circuit for the third straight session, even while fresh financial and legal pressures came into view. The stock has jumped more than 15% in the last three trading sessions, pointing to strong short-term buying activity.

In early trade, the stock dipped briefly before recovering. At 10:52 AM, SpiceJet shares were locked at the 5% upper circuit limit of ₹12.27.

Why Are Investors Still Buying The Stock?

The rally comes despite a setback from a UK court. London’s Commercial Court has ordered the airline to pay nearly $8 million, or about ₹70 crore, to engine lessor Sunbird France 02 SAS over unpaid dues.

The case relates to lease rentals pending since January 2022 and maintenance-related payments going back to late 2020. The court observed that the airline did not present a strong defence and had not taken part in the proceedings despite being given opportunities.

Even so, market participants appear to be focusing on price action rather than the underlying issues. The quick recovery after an early dip suggests that traders are chasing momentum, at least for now.

Job Cuts And Salary Delays Add Pressure

At the operational level, the airline is taking steps to cut costs. Over 500 employees have been impacted in the first phase of workforce reductions. These include layoffs, furloughs, and leave without pay.

The airline now operates only 13 of its own aircraft, compared to around 50 earlier. This sharp reduction has forced a rethink on staffing needs. Reports indicate that up to one-fifth of the workforce could be affected over time.

Salary delays have added to employee concerns. In several cases, payments have been pushed back by as much as three months. Some employees are still waiting for their pending dues. This has made things difficult at the ground level.

There have also been changes for pilots. A revised contract structure could reduce monthly earnings by roughly 20%, even though the airline says the move is meant to improve schedules.

Also Read - Centre Limits Refinery Margins Amid Domestic Fuel Sale Losses

What Does This Mean For SpiceJet’s Outlook?

The pressure on the airline's finances is still evident in the metrics. The statutory debt alone has been projected at above ₹100 crore. The total debts are believed to be above ₹4,500 crore, even after raising ₹3,000 crore in September 2024.

Auditors have already expressed doubts about its future as a going concern. At the same time, lessors may move Indian courts to enforce the UK ruling, which could increase near-term pressure.

The recent stock surge stands in contrast to its longer-term trend. The shares are still down about 74% over the past year, while the Nifty 50 has posted modest gains in the same period.

For now, the rally reflects short-term sentiment. The bigger question is whether the airline can fix its balance sheet and stabilise operations before these pressures build further.

Sources:

Moneycontrol

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