In January 2015, Ajay Singh was gripped with a way of déjà vu. SpiceJet was on the ventilator.
“Are you able to revive it?” stuttered the pinnacle of a service provider financial institution on the opposite facet of the cellphone, failing to masks his anxiousness about his investments within the low-cost airline.
The earlier month, SpiceJet, the airline Singh based by shopping for a defunct ModiLuft in 2004 and renaming it a 12 months later, had been abruptly grounded. It had run out of cash, having posted losses in three consecutive years. In 2013-14 (FY14), the losses ballooned nearly 5 occasions to ₹1,003.24 crore, in comparison with the earlier 12 months. Its debt had reached staggering ranges.
“Once I left, it (SpiceJet) had ₹700 crore in money. By January 2015, it had liabilities of ₹3,500 crore,” says Singh in an interview with Forbes India. He had left it in 2010, when Kalanithi Maran, chairman and managing director of the Solar Group, purchased the airline from American non-public fairness agency Wilbur Ross and the United Kingdom-based Kansagra household.
Positive sufficient, in 2015, he was again to cradling his child, because of his report of turning round Doordarshan (DD) and the Delhi Transport Company (DTC). The bankers wager on him and had been rewarded for his or her confidence with 17 consecutive quarters of worthwhile progress.
However it was not meant to final. From 17.1 p.c in Might 2020, SpiceJet’s market share dipped to 2 p.c in September 2024. Its fleet of working plane was all the way down to 17 from a excessive of 114 in March 2020.
Singh was once more possessed with déjà vu. “I couldn’t let it die,” he says. “That is an airline that refuses to die. We gained’t die,” he provides.
What egged him on had been the jibes of naysayers. “How are you going to survive with simply 17 plane?” they mentioned. “You gained’t be capable to pull it off this time.”
Virtually inevitably, Singh resolved to show them unsuitable. In September final 12 months, he raised ₹3,000 crore via Certified Institutional Placement (QIP) in simply 17 days. He allotted ₹800 crore for the service of grounded plane, one other ₹800 crore for working capital, and ₹1,400 crore for clearing dues. Over the subsequent quarter, he signed a bunch of offers to scrub his steady (see field). Inside three months, the fleet inched as much as 28. “We’ll take it to 35 by April this 12 months,” he says, including that the airline ended the 12 months with a 3.7 p.c market share.
Can he do the unthinkable as soon as once more?
It’s not going to be straightforward. A report by rankings agency CareEdge says: “Losses over time have considerably eroded the corporate’s internet value.” Although the airline has used the QIP cash to clear its dues and get again in form, a turnaround in internet value depends upon its potential to maintain earnings. “The corporate has complete debt of ₹5,379 crore on March 31, 2024, of which lease legal responsibility was ₹4,227 crore,” says the report launched final month.
Misplaced and Discovered
In 2010, Singh didn’t need to promote. “I by no means needed to promote my child,” he recounts. His choices had been restricted by an unprecedented rise in aviation gasoline value, which, in flip, had dented SpiceJet’s backside line, pushing losses up from ₹70.74 crore in FY07 to ₹376.38 crore in FY09. The working income, although, was going the opposite method: From ₹640.44 crore to ₹1,689.45 crore throughout the identical interval.
“We simply wanted to hold in. I knew we might handle to fly out of losses,” he says.
The buyers didn’t agree. They offered their stakes. Singh, too, exited.
5 years later, he obtained a name from the anxious banker talked about above. “Are you able to do it?” the banker requested. Aside from Singh’s position in turning round DTC and DD, the banker was additionally impressed by his involvement within the Nationwide Telecom Coverage and Info Know-how Act in 1998-99. These had been throughout his years of political activism.“I needed to be in public service,” Singh says.
That ambition got here crashing down when the Bharatiya Janata Get together misplaced the 2004 Lok Sabha election. Singh was blamed for the ‘India Shining’ marketing campaign, which was seen to be disconnected from the fact on the grassroots. “That was the primary massive setback and failure in my life,” he remembers.
Six years later, in 2010, got here one other setback when SpiceJet was offered. Although the blow was devastating, Singh lived to struggle one other day. “I’m an everlasting optimist. kuchh na kuchh to ho jayega. Kuchh na kuchh to kar lenge (I at all times really feel that one thing will work out. I’ll do one thing),” he says.
One thing did occur in 2015, when he was referred to as upon to revive SpiceJet.
What If
After regaining management, Singh wager massive on his most fascinating pitch for stakeholders: ‘What if’.
He organised a flurry of townhalls with workers and underscored one message. “If we fail, no person will blame us. Everyone is aware of it’s an not possible activity. However what if we revive SpiceJet? What if we flip this round?”
He implored everybody to give attention to the upside. The staff purchased into his optimism.
The debtors and lessors, too, fell in line. Singh informed them: “What’s going to you get if the airline goes for chapter? Nothing! Zero!” He laced his pep-talk with realism and tried to take away the most important impediment in scripting a turnaround. “If we lose, you additionally lose. However what if we win?” he informed the embattled collectors and dangled the bait of clearing all dues in three years. They agreed.
What ensued was nothing wanting miraculous. SpiceJet posted 17 consecutive quarters of worthwhile progress. “We returned the cash in two years,” says Singh.
In 2020, SpiceJet grew to become the second greatest airline after IndiGo. “We had been flying excessive,” he remembers. The airline had a 17.1 p.c market share in Might 2020.
Then got here the pandemic. And every thing got here crashing down.
Additionally learn: Indian aviation sector in 2025: Airlines face headwinds
What’s This!
Quick ahead to September 2024. SpiceJet’s market share plummeted to 2 p.c. It went from being the second greatest airline in India to sixth. IndiGo had 63 p.c, Air India 15.1 p.c, Vistara 10 p.c, and Akasa—the latest child on the block—was forward of SpiceJet for the second consecutive quarter with 4.4 p.c, in accordance with a site visitors report by the Directorate Normal of Civil Aviation (DGCA).
What made issues worse was the depletion of its fleet. The airline was near working out of cash. A near-death state of affairs loomed. Detractors sharpened their knives.
It was then that Singh pulled the QIP out of his hat. “We now have survived, and now it’s a turnaround-in-progress,” he says.
In October final 12 months, a month after the profitable QIP, the DGCA eliminated SpiceJet from “enhanced surveillance”, below which it was positioned in view of the monetary constraints that “may probably have an effect on discharge of necessary obligations of plane upkeep”. After 266 spot checks, the regulator mentioned in a press launch: “It has been ensured that deficiencies and findings discovered through the spot checks have been topic to appropriate rectification motion by the operator. In mild of the identical and the monetary infusion of further funds into the corporate, SpiceJet has been taken off the improved surveillance regime.”
However the air pocket of debt that lies in wait gives him no respite. The second massive problem is the liquidity constraint. Although it raised ₹3,000 crore in September 2024, it will want extra. Add to that the headwinds arising from publicity to gasoline costs and international trade charges, which have seen the rupee contact historic lows.
Over the 5 fiscal years via FY24, factors out the CareEdge report, SpiceJet has been reporting working losses, that are estimated to proceed in FY25 (see field). Initially, working profitability was affected by a spike in gasoline prices and antagonistic foreign exchange charge, resulting in increased lease rental outgo, and different dollar-dominated bills, the report explains. The heavy dependence on Boeing doesn’t assist. Boeing constitutes a majority of SpiceJet’s fleet, whereas IndiGo has Airbus. Boeing has been grappling with operational points for over 5 years.
Thankfully for Singh, folks have learnt to not rule out a comeback by him.
Debilitating Blow
“He (Singh) has revived the corporate up to now. He’s greatest suited to take action now,” says Sanjay Dangi, director at Authum Funding & Infrastructure, one of many institutional buyers that participated in SpiceJet’s QIP in September. The airline’s operational points, he asserts, have rather a lot to do with a sequence of exterior components.
The largest setback, Dangi factors out, was the worldwide grounding of the Boeing 737 Max plane in March 2019, triggered by two crashes. In October 2018, a Lion Air MAX aircraft crashed in Indonesia, killing all 189 on board. 5 months later, an Ethiopian Airways MAX crashed, killing all 157 on board. In March 2019, SpiceJet needed to floor 13 Max plane, which lowered its fleet to 76.
This was a debilitating blow. In June 2017, SpiceJet ordered as much as 205 planes from Boeing. “Round 150 planes had been supposed to return by 2024,” Singh says. “This could have given us some ₹12,000 crore in money in our financial institution,” he says, alluding to how the dynamics work in a ‘sale-and-leaseback mannequin’ utilized by most airways for getting plane. Beneath it, an airline buys an plane at a gorgeous value, sells it to a lessor, and leases it again for its use.
Sale-and-leaseback, Singh factors out, generates money and helps airways with fleet flexibility. The grounding of Max in March 2019 modified that math. “Was the grounding of Max my fault? Who may have factored in such a factor?” he asks.
Silver Linings
Amid the gloom, Singh was on the lookout for a silver lining. He discovered it within the troubles of rival airline Jet Airways.
In April 2019, Jet had suspended its operations. Singh as soon as once more performed the ‘what if’ card with a protracted record of debtors and lessors of Jet and managed so as to add 32 of Jet’s plane to his personal fleet. He purchased time from the debtors and promised to return their cash quickly. “We continued. We survived,” he says.
A couple of months later, in March 2020, got here the Covid-19 pandemic. Journey and hospitality industries had been devastated, flights had been grounded, and it appeared like the tip of the world.
Singh, on the lookout for a brand new starting, transformed his planes into cargo carriers and began earning profits. “We did ₹3,000 crore in enterprise in cargo,” he says. The cash was used to pay salaries, to maintain operations and to outlive.
The survival, although, got here at a price.
Two years later, because the world was popping out of the pandemic, there was an enormous rebound within the journey enterprise. The debtors and lenders got here calling. Singh was barely surviving and couldn’t clear the dues. The rising oil costs additionally added to his woes. His plane started to get grounded.
“There was non-payment of dues to lessors and lack of upkeep on plane because of monetary constraints and non-availability of elements and spare elements,” highlights CareEdge in its report.
Singh factors to the cruelty of the exterior components. “Was Covid my fault? A gasoline value hike was not below my management,” he says. “I may solely fear in regards to the issues below my management.”
Trade specialists empathise with him. “He had a dream run from 2015 until the Boeing crash. SpiceJet went to over 100 plane in simply 4 years,” says Kapil Kaul, CEO of CAPA India, an aviation consulting agency. “You’ll be able to’t blame him for his place.” What’s exceptional about Singh, Kaul contends, is his resilience. “He by no means offers up. He finds a solution to survive,” he says.
As issues stand right this moment, Singh is busy doing the issues which might be below his management. He has raised cash, is clearing the mess by settling dues, and is prepared for his subsequent flight.
“You’ll be able to’t do a lot in regards to the playing cards you may have been handled. It is advisable to focus in your hand,” he says, alluding to his umpteen efforts in pulling himself out of troughs over the past twenty years. Although he admits that he has made his share of errors, Singh reckons he can’t rewire himself to take a look at the draw back. “You would possibly say that not constructing a money reserve was a mistake, however who may have foreseen the 737 crashes?” he provides.
So, are the detractors appropriate of their evaluation that Singh’s behavior of ignoring the draw back has usually put SpiceJet on a sticky runway?
Surprisingly, Singh agrees. “The critics are proper. Possibly anyone else in my place would have deliberate for a draw back. It’s attainable,” he confesses, including that he has been attempting to find an in a position alternative, however has had no luck to date. “I can both put folks round me or substitute myself. However I would like to do that sooner or later in time,” he says.
The airline would possibly finally get a brand new CEO, however the model will at all times retain its core. “I may have shut. However I can’t shut down. That’s not in my DNA,” he says, mentioning that a couple of airways went out of enterprise over the previous couple of years, resembling Kingfisher, GoAir and Jet Airways. Aviation, he reckons, is a tricky enterprise. “However for those who do it proper, it’s a nice enterprise to be in.”
So, is that this the final time the world is witnessing SpiceJet trying a comeback?
Singh smiles. “With each comeback, you hope there gained’t be the subsequent setback,” he says. He prefers to give attention to his efforts reasonably than on monickers that the world has bestowed on him. “If there may be one phrase that describes me, it’s survivor,” he says. SpiceJet, he stresses, is an airline that refuses to die. “We gained’t die. We’ll survive. We’ll fly.”
