Even as forecasts for India’s aviation sector look brighter with local traffic surging 94% in July, SpiceJet may find it difficult to make a comeback. Image Credit: Bloomberg

SpiceJet Ltd said it’s in talks with bankers to raise as much as $200 million in fresh capital after reporting a worse than expected quarterly loss, as the Indian airline looks to work a way out of financial distress.

The carrier plans to also spin off its cargo business into a separate company, SpiceXpress, by the end of next month and add more freighters in the fiscal year 2023, chairman Ajay Singh said in the filing on Wednesday.

SpiceJet chief financial officer Sanjeev Taneja, who took charge in 2020, resigned effective immediately with the airline deep in crisis. The board has identified a replacement, who will take over in September.

The no-frills carrier posted a loss of Rs7.89 billion ($99 million) for the three months through June, according to the filing. That was worse than the average analyst estimates of a Rs6.27 billion deficit.

Even as forecasts for India’s aviation sector look brighter with local traffic surging 94 per cent in July, SpiceJet, which has slipped from No. 2 to No. 5 in the rankings, may find it difficult to make a comeback. Jet Airways India Ltd is planning to resume flying by September and Air India Ltd is headed for a revamp under Tata Sons’ management.

“The industry has been witness to one of the most severe operating environments in the recent past which impacted the progress and recovery,” Singh said. High jet-fuel prices and depreciating rupee were “major contributors”, he said.

Credit rating firm ICRA Ltd estimates that India’s airlines lost $3.4 billion in the year through March, after the omicron coronavirus variant disrupted local airlines’ early recovery following the deadly delta wave in 2021.

SpiceJet faces several challenges. India’s aviation regulator has capped the number of seats the carrier can sell at 50 per cent for eight weeks after it reported a string of mid-air malfunctions. The regulator has said the airline failed to build “safe, efficient and reliable” air services and in July summoned it to explain the incidents.

Wednesday saw the release of two quarters of financial results in one day after SpiceJet postponed its earnings following a ransomware attack that canceled and delayed its flights.