SpiceJet clears AAI dues, out of ‘cash & carry’ arrangement

SpiceJet said the release of its Rs 50 crore bank guarantee “will result in additional liquidity for the airline”.

SpiceJet clears AAI dues, out of ‘cash & carry’ arrangement
Recently, aircraft lessor AWAS asked DGCA to deregister three Boeing 737 aircraft leased to SpiceJet due to financial issues.

SpiceJet announced on Tuesday that it has cleared all outstanding principal dues of Airports Authority of India (AAI), entering into a full and final settlement with the state-run airport operator.

The low-cost carrier is now out of the ‘cash and carry’ arrangement at AAI-run airports and will revert to an advance payment mechanism for its daily flight operations. AAI will also release SpiceJet’s Rs 50 crore bank guarantee.

The development comes within a week of the Directorate General of Civil Aviation (DGCA) ordering SpiceJet to operate only 50% of its approved flights for eight weeks following at least eight incidents of technical snags in its planes in 18 days. To increase the departures beyond 50%, the airline will have to demonstrate to the satisfaction of the DGCA that it has sufficient technical support and financial resource.

Recently, aircraft lessor AWAS asked DGCA to deregister three Boeing 737 aircraft leased to SpiceJet due to financial issues.

In a statement, the airline said: “SpiceJet will no longer remain on ‘cash and carry’ at AAI-run airports across the country and will revert to advance payment mechanism for daily flight operations.”

SpiceJet said the release of its Rs 50 crore bank guarantee “will result in additional liquidity for the airline”.

After several technical malfunctions, on July 5, the DGCA issued a show-cause notice to SpiceJet, noting that the airline had failed to establish a safe, efficient and reliable air transport service.

A Delhi-Dubai flight of SpiceJet was diverted to Karachi on July 5 due to a malfunctioning fuel indicator. On the same day, the airline’s Kandla-Mumbai flight did a priority landing in Mumbai after cracks developed on its windshield mid-air. Besides, its freighter aircraft heading to Chongqing in China returned to Kolkata as the pilots realised after the take-off that its weather radar was not working.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos