SpiceJet completes SpiceXpress hive off to separate entity
SpiceJet has completed the separation of its cargo and logistics division, SpiceXpress, into a separate entity, allowing the company to raise funds on its own. The hive off was done with the goal of increasing the growth of the airline’s cargo business while also providing a more streamlined and efficient service to its customers.
The separation became effective on April 1. The airline stated that the separation would strengthen its balance sheet, eliminate a significant portion of its negative net worth, and unlock significant value.
SpiceXpress will pay the slump sale consideration in the form of securities, including equity shares and mandatory convertible debentures, totaling Rs 2,555.77 crore. This sum is also expected to strengthen SpiceJet’s balance sheet.
“The separation of our cargo and logistics arm is a stepping stone in our growth story that will unfold in the coming times,” said Ajay Singh, Chairman and Managing Director of SpiceJet. SpiceXpress will provide a more differentiated focus on cargo and logistics business and will allow the company to raise capital to accelerate its growth.”
Singh stated that the decision to separate SpiceXpress is consistent with the airline’s long-term business strategy. “Both SpiceJet and SpiceXpress have a lot of potential and will work well together,” he says.
SpiceJet’s CEO stated that separating SpiceXpress will allow it to raise cash on its own and significantly reduce SpiceJet’s negative net worth. “After restructuring over $100 million in outstanding dues to Carlyle Aviation Partner last month,” he said, “the hive off will further strengthen and deleverage our balance sheet.”
SpiceJet’s fleet consists of Boeing 737s, Q-400s, and freighters. SpiceXpress and Logistics Private Limited is a SpiceJet Limited subsidiary that provides hassle-free cargo and delivery services.