Shares of cash-strapped SpiceJet gained slightly on September 26, even as Ireland-based Carlyle Aviation Management reduced its stake in the airline. Carlyle Aviation offloaded 1.42% of its stake through open market transactions between September 17 and 23. Despite this move, investors looking to invest in stocks remained interested, pushing the stock price higher.
Carlyle Aviation, a key aircraft lessor for SpiceJet, sold over 1.81 crore shares, reducing its holding in the airline to 2.99 crore shares. This sale comes after Carlyle's stake increased as part of SpiceJet's debt-restructuring strategy. The restructuring aimed to ease the airline's financial strain while encouraging investors to invest in stocks like SpiceJet.
Earlier this month, Carlyle converted $30 million of lease dues into equity at ₹100 per share as part of this restructuring. Carlyle also converted $20 million into compulsorily convertible debentures (CCDs) of SpiceJet's cargo division, SpiceXpress & Logistics. This long-term strategic move has created optimism for those looking to invest in stocks related to the aviation sector.
Carlyle's move to convert lease arrears into equity is not new. Last year, the lessor adjusted $28 million in outstanding dues for a 5.9% stake in SpiceJet. Such restructuring moves have helped the airline navigate its financial difficulties while keeping it appealing for investors who want to invest in stocks with long-term potential.
In another significant development, SpiceJet recently settled a $16.7 million dispute with Engine Lease Finance Corporation (ELFC). Although the settlement amount was lower than the initial claim, it was a major milestone for the airline in resolving its legal battles and strengthening its financial position.
As of 9:42 AM on September 26, SpiceJet shares were trading at ₹63.06, a 1% increase. While the airline's stock has only gained 4% this year, it has outperformed the market over the past year, rallying over 72%. This significant performance, compared to the Sensex's 30% rise in the same period, has made it an attractive option for investors keen to invest in stocks in the aviation sector.
Despite financial challenges, SpiceJet's efforts to restructure its debt and settle legal disputes have positioned it well for future growth. Carlyle's ongoing support and equity conversions are part of a broader plan to stabilise the airline.
For those looking to invest in stocks, SpiceJet remains an option, particularly as the company resolves financial hurdles and strengthens its operations. The company's steady rise in stock performance demonstrates the potential rewards for investors who choose to invest in stocks in this sector.
Conclusion
For individuals looking to invest in stocks, particularly in the volatile airline industry, SpiceJet's recent developments offer a glimpse of both risk and opportunity. The stock's upward trajectory, despite ongoing challenges, makes it a compelling choice for long-term investors.
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