SpiceJet’s white knight, its previous promoter Ajay Singh, aims to revert to the previous fleet size of 35 Boeing B737 aircraft to expand the scale of operations and improve margins at a time when jet fuel prices are at a four-year low.
A top official in the ministry of civil aviation said on Monday that Singh, who hopes to take back charge of the beleaguered airline from Sun Group’s Kalanithi Maran, is in talks with lessors to take back planes that were returned over the past 3-4 months by the airline’s management.
The low-cost airline is currently down to 22 B737 aircraft and 15 smaller capacity Bombardier Q400, a move that has taken daily flights down by 32% to 230 today from a peak of about 340 in July this year. The current management, led by COO Sanjiv Kapoor, has reduced fleet size to trim costs by returning older aircraft that had higher maintenance expenses.
“Ajay Singh is very serious about reviving the airline. In a plan presented to ministry officials today (Monday), he said that he aims to get back to the fleet size in the near future and is talking to the lessors. He has also sought more time to clear dues,” the ministry official said.
Singh is speculated to be in talks with several US-based private equity firms for investing about Rs 1,200-1,500 crore in the airline.
“Singh has sought 2-3 weeks for the final investor plan because of delays as most people in the US are on Christmas leave right now,” a second ministry official said.
Incidentally, ministry officials added that Prime Minister Narendra Modi had discussed SpiceJet’s problems at the Cabinet meeting held last week. The government does not want the airline to go down and is willing to offer additional support given it is able to show seriousness in its revival efforts. The government has asked SpiceJet to show about Rs 200 crore in its bank accounts by December 31, as reported by FE in its edition dated December 20.
SpiceJet has about Rs 2,000 crore of liabilities, of which Rs 1,400 crore needs to be cleared immediately for it to stay active. This includes
Rs 200 crore of AAI dues, about Rs 700 crore with aircraft lessors. SpiceJet has also not paid salaries to employees in the top 15% wage bracket that includes most pilots and senior management.
Th airline, which posted a record loss of Rs 1,003 crore in 2013-14 and has run up accumulated losses of Rs 2,958 crore, currently apart has a negative net worth of Rs 1,459 crore. The airline’s domestic passenger market share in November fell to 14.9%, the lowest in the year so far.
The SpiceJet scrip on the BSE closed up17.09%, to Rs 18.50, on Monday.