Beleaguered low-cost carrier Spicejet seems to have received a temporary breather from the government, official sources told FE. With the loss-making airline making an interim payment of Rs 5 crore on Wednesday against dues of about Rs 200 crore to state-owned Airports Authority of India (AAI), the ministry of civil aviation has allowed it time till Monday (December 15) to furnish the balance.
This comes after the government’s current deadline for payment ended on Wednesday (December 10). Incidentally, Spicejet was also offered an alternative option to furnish equivalent bank guarantees, though bankers told FE that it was unlikely it will receive any such guarantee without security.
“The issue has been handled. We are not on cash and carry for any airport,” a Spicejet official confirmed the development.
If the government had stood its ground, Kalanithi Maran-promoted Spicejet would have been put on a cash and carry mode under which it would have had to clear all airport charges like landing and parking fees each time a flight takes off.
Separately, Spicejet also has to submit a payment plan to aviation regulator DGCA by Monday (December 15) in order to assure the regulator that the airline’s financials are strong enough to carry on operations with no threat to safety. Official sources said that the airline owes about Rs 1,600 crore to various vendors and business partners – including about Rs 700 crore to lessors for aircraft, though company officials have claimed that the figures is “significantly less”.
On Tuesday, top Spicejet executives like COO Sanjiv Kapoor, and officials from promoter Chennai-based Sun Group, such as group CFO S L Narayan, met the DGCA Prabhat Kumar and other top government officials. The DGCA asked the airline to submit a “concrete revival plan” with specifics on how it plans to recapitalise, in order to ensure the airline does not go down like Kingfisher Airlines in 2012. Moreover, Sun Group officials have also sought a meeting with the union civil aviation minister P Ashok Gajapathi Raju.
Spicejet, which posted a record loss of Rs 1,003 crore in FY14, currently has accumulated losses of Rs 2,958 crore and a negative net worth of Rs 1,459 crore. The airline, which has reduced its Boeing 737 fleet to 22 from 37 last year by returning old aircraft with high maintenance costs, has cut about 70 flights a day from 350 in July this year. It is also behind on salary payments, especially to employees in the top 15% wage bracket, while several pilots are also said to be leaving for rival airlines.
The Spicejet scrip at the BSE closed 3.51% up to Rs 16.20 on Wednesday.