SpiceJet Shares Rebound Despite DGCA's Show-Cause Notice On Multiple Malfunctions
Shares of SpiceJet fell more than 4% to Rs 36.1 apiece—a 52-week low.
Shares of SpiceJet Ltd. fell to their 52-week low in intraday trade after multiple incidents of technical malfunction prompted the aviation regulator to issue a show-cause notice. The stock, however, erased all losses and closed higher.
Since June 19, the budget carrier has reported at least eight instances, ranging from a bird hit and smoke in cabin to cracks in windshield outer pane and indicator light malfunctioning, PTI reported citing officials of the Directorate General of Civil Aviation.
On July 6, the aviation regulator issued a show-cause notice to the airline in connection with the degradation of safety margins of its aircraft. The DGCA is investigating all the incidents.
The regulator, in its show-cause notice, said SpiceJet has failed to establish a safe, efficient and reliable air services under appropriate sections of Aircraft Rules, 1991. A financial assessment in September 2021 revealed that the company did not pay suppliers/approved vendors on a regular basis leading to shortage of spares and invoking of minimum equipment list, it said.
The review of several incidents of SpiceJet aircraft malfunction, the DGCA said, indicated inadequate maintenance actions and poor internal safety oversight. SpiceJet has been asked to respond to the show-cause within three weeks.
SpiceJet has confirmed the incidents of malfunction on Twitter.
July 5, 2022: SpiceJet Boeing 737 Freighter (cargo aircraft), scheduled from Kolkata to Chongquing returned to Kolkata soon after take-off. ANI quoted SpiceJet spokesperson saying that the weather radar did not show the weather after the takeoff, prompting the decision to return.
The same day, SpiceJet’s Boeing 737 Max Delhi-Dubai flight was diverted to Karachi due to malfunctioning in fuel indicator. In a separate incident, its Kandla-Mumbai domestic flight did a priority landing in Mumbai after cracks developed on its windshield mid-air.
July 2: A SpiceJet Delhi-Jabalpur flight returned back to Delhi after crew noticed smoke in the cabin.
June 19: The cockpit crew of SpiceJet’s Delhi-bound aircraft from Patna suspected a bird hit. Separately, the airline’s flight from Delhi to Jabalpur had to return back to the capital as cabin pressure was not building up.
June 24 and 25: Fuselage door warnings lit up on two planes.
Shares of SpiceJet rose 2% after swinging between gains and losses for most part of the session. The scrip hit a 52-week low of Rs 36.1 apiece in intraday trade before reversing losses. The stock settled with 2.25% gains. The stock’s trading volume is more than quadruple the 30-day average, at the time of markets close.
Of the 10 analysts tracking the company, two suggest a ‘buy’, five recommend a ‘hold’ and three maintain a ‘sell’, according to Bloomberg data. The average of the 12-month target price implies an upside of 47.9%.