Shares of SpiceJet hit over a two-year low of Rs 34.60 and slipped 10 per cent on the BSE on Thursday after the company was asked by aviation regulator DGCA to curtail its services by half for eight weeks. In response SpiceJet said, it has already been running half its approved capacity, in effect meaning the regulator’s restrictive mandate would have no impact on its operations.
“In view of the findings of various spot checks, inspections and the reply to the show cause notice submitted by SpiceJet, for the continued sustenance of safe and reliable transport service, the number of departures of SpiceJet is hereby restricted to 50 per cent of the number of departures approved under summer schedule 2022 for a period of eight weeks,” the aviation regulator’s order on Wednesday said.
DGCA on Wednesday had said any increase in the number of flights will be subject to “the airline demonstrating to the satisfaction of DGCA that it has sufficient technical support and financial resources to safely and efficiently undertake such enhanced capacity.”
The move comes within days after India’s aviation ministry told the parliament that the DGCA did not find ‘any major significant finding or safety violation’ in SpiceJet.
SpiceJet reported two separate air safety incidents earlier in July, with one Dubai-bound plane making an emergency landing in Pakistan due to an issue with the cockpit light.
The stock of the airline company was quoted at its lowest level since March 2020. At 09:56 AM; it traded 7 per cent lower at Rs 35.75 as compared to 0.96 per cent rise in the S&P BSE Sensex. SpiceJet has corrected 60 per cent from its 52-week high level of Rs 87.25that it had touched on November 24, 2021.
The stock has given a negative 3-year return of 73.94 per cent as compared to a 56.64 per cent rise seen in the Nifty Smallcap 100. SpiceJet is a budget airline with a market cap of Rs 2,142.40 crore.
In the first week of July, DGCA had issued a show cause notice to SpiceJet for its failure to ensure safe, efficient and reliable services after eight incidents within a month. The airline was asked to explain in three weeks why no action should be taken against them. Before this, last year after a financial audit, DGCA found out about SpiceJet’s inadequate pool of spare parts.
Meanwhile, SpiceJet has not yet announced their financial results for the quarter and financial year ended March 31, 2022, due to the ransomware attack on their IT systems. On May 27, 2022, the company said that it is taking the corrective measures with assistance of cyber experts and authorities on the issue.
For the first nine months ended December 2021 (9MFY22), SpiceJet had reported a consolidated net loss of Rs 1,259 crore against loss of Rs 773 crore in 9MFY21.
SpiceJet, which holds nearly 10% of India’s domestic market, operates a fleet of about 80 narrow-body aircraft, more than half of which are Boeing 737 variants.