Ajay Singh, the entrepreneur who founded and currently heads budget airline SpiceJet, reassured investors and other stakeholders after his company’s stock fell 20% today as part of a broader market correction.
Shares of SpiceJet were down Rs 12.05 at Rs 48.30 at close on the National Stock Exchange today.
Shares of rival and market leader InterGlobe Aviation too fell almost an equal amount during the day, but recovered about half of its losses to close down 10.7% for the day.
InterGlobe Aviation had, after market close yesterday, reported that there was a “15-20% decline” in bookings over the past few days due to fears about COVID 19, a new virus belonging to the Coronavirus family that has been declared a pandemic by the United Nations.
“We expect our quarterly earnings to be materially impacted because of the above. In addition, the rupee has also depreciated sharply which will have an adverse impact on our dollar denominated liabilities primarily on account of capitalized operating leases,” it said.
In a statement today, Ajay Singh said he continues to be optimistic about the prospects of the airline business in India, and his own company in particular.
“The aviation sector is under a lot of pressure,” he said. “But this is temporary. We have been here before. SpiceJet is far better placed than many others to weather this turbulence.
“I firmly believe that this is an opportunity for SpiceJet, for the government and the aviation ecosystem to create more efficient and viable structures for the growth that lies ahead. SpiceJet will emerge even stronger from this.
“The Indian aviation market and especially our domestic market has immense potential and will remain amongst the fastest growing in the world.”
He also lauded the government’s efforts to curb the spread of the disease.
“The government is doing an excellent job in managing the crisis and India has managed to contain COVID-19 cases to a large extent. I am confident that the proactive steps that have been taken by the government will help us overcome this crisis situation and set India apart as a prudent and safe country,” he said.
“We are closely working with the government and look forward to their continued guidance and support.”
Anecdotal evidence suggests that many flights are thinly booked and planes are flying with only a fraction of the seats occupied.
Many big countries, including the US and India, have imposed restrictions on international travelers, with India canceling most of the outstanding visas temporarily.
Even on domestic sectors, travelers are worried about catching the virus due to the confined nature of the airplane.
Typically, as and when COVID 19 infections are brought to light, all those who traveled on a plane with the infected person are put under observation.