Cold-shouldered by oil marketing companies and shunned by banks, beleaguered carrier SpiceJet, which is looking for just Rs.600 crore.
Cold-shouldered by oil marketing companies and shunned by banks, beleaguered carrier SpiceJet, which is looking for just R600 crore to settle its dues, barely managed to operate 75 flights on Wednesday.
While former promoter Ajay Singh, who met with civil aviation ministry officials on Wednesday, could turn out to be a white knight, it wasn’t immediately clear what the game plan is. “Ajay Singh has shown interest in rescuing the airline, but it is not clear how much investment is proposed,” a ministry official said.
SpiceJet resumed flights post 4 pm on Wednesday after paying oil marketing companies about R3 crore but it was likely it would not be able to access fuel after 9 pm. While it had appeared on Tuesday evening that the aviation ministry had convinced OMCs to give the airline credit for 15 days, sources in the petroleum ministry said it was up to the companies to decide whether they wanted to provide the carrier fuel
Earlier in the morning, the management said it could get going if banks loaned it R600 crore, given how the cost of aviation turbine fuel has fallen in recent months. However, bankers, it said, were unwilling to give the carrier credit despite a personal guarantee from promoter Kalanithi Maran of the Sun Group. “When all creditors land up at the doorstep at the same time, a stressed company cannot survive,” a visibly disturbed SL Narayanan, group CFO, Sun Group, told a television channel, adding that the family office was not in a position to infuse any more capital into the airline at this point.
The aviation ministry had asked Airports Authority of India to give the airline 15 days to pay around R200 crore and directed aviation regulator Directorate General of Civil Aviation to lift the ban on ticket bookings beyond 30 days and extend it to March 31 so that the airline could access cash from ticket sales. It had also requested banks to loan R600 crore to the airline. However, the banks were not forthcoming with funds and aviation ministry sources clarified that a decision on loans would be left to the banks and that the government would not issue any directive.
As such, most flights on Wednesday were cancelled or delayed by five to six hours. SpiceJet owes OMCs like IndianOil, Bharat Petroleum, Hindustan Petroleum, Shell and Reliance a total of R14 crore.
“If they (SpiceJet’s promoters) come out with a concrete proposal for investment, the government will help them. We do not want the company to fail, but the government cannot help one single company. Any possibility of us helping will be in the interest of the passengers and employees,” Mahesh Sharma, minister of state for civil aviation, said.
The sharp cut in operations has driven down SpiceJet’s daily revenue from Rs 14-15 crore a day in the first week of December to Rs 50 lakh a day, making it more difficult for the airline to arrange working capital to meet expenses like fuel, airport and vendor charges, and staff wages. SpiceJet currently needs to clear dues of about Rs 1,400 crore immediately to stay afloat, and about Rs 2,000 crore to cover all liabilities. SpiceJet, 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 has a negative net worth of Rs 1,459 crore.