SpiceJet shares fly 3% higher after hiving off cargo and logistics wing

Shares of SpiceJet edged up 3 percent intraday on April 3 after the company hived off its cargo and logistics business into a separate
entity, SpiceXpress and Logistics Private Limited.

“The demerger, aimed at boosting growth of its cargo business is effective April 1, 2023 and paves the way for SpiceXpress to raise funds independently,” the low-cost carrier said in an exchange filing.

The hive-off will also strengthen SpiceJet’s balance sheet and wipe out a significant portion of the airline’s debt as it will bring in a one-time gain worth Rs 2,555.77 crore.

At 12.36pm, shares of SpiceJet traded at Rs 30.95 on the National Stock Exchange, up 2.31 percent, from Friday’s close.

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“The decision to hive off SpiceXpress is in sync with our long-term business plan and will unlock significant valuation of the logistic business. Having restructured over $100 million, outstanding dues to Carlyle Aviation Partner last month, the hive-off will further strengthen and deleverage SpiceJet’s balance sheet,” Ajay Singh, Chairman and Managing Director of SpiceJet, said in the exchange filing.

In February,  Carlyle Aviation Partners agreed to convert its outstanding lease rental in SpiceJet into a 5 percent equity stake in the carrier. The Carlyle Group-owned firm had the largest exposure among lessors. After the conversion, Carlyle Aviation Partners’ holding in the airline will reach 7.5 percent.