SpiceJet Back To Sky
SpiceJet Ltd has started with flights after oil companies started providing fuel to the company’s aircraft following a token payment of its dues. On Wednesday, SpiceJet had grounded its flights as the oil companies denied refueling due to pending dues. “Flights have resumed after we made a token payment to oil marketing companies towards dues,” said a senior SpiceJet executive, later an executive with Hindustan Petroleum Corp. Ltd confirmed the development. “We have started refuelling SpiceJet. The airline has paid money too,” he said.
Sanjiv Kapoor, SpiceJet’s COO said the airline’s dues to oil companies was at Rs.14 crore and the company had never defaulted on payments. The aviation company received a temporary reprieve after the civil aviation ministry asked the banks to provide the company a short-term working capital loans aggregating to Rs.600 crore thus allowing it to continue to book tickets a little over three months in advance (till the end of March) and asking state-owned oil companies to extend a credit line for jet fuel for two more weeks.
The ministry, which announced these relief measures in a late evening statement on Tuesday, also said airport operators would wait for two more weeks for the company to pay them their dues and that it would request the ministry of finance to permit the airline to borrow overseas for working capital as a special case. The ministry’s statement comes a day after the airline sought state support amid concerns that it could shut down. The ministry had, through aviation regulator Directorate General of Civil Aviation (DGCA), asked SpiceJet, which was raising some of its working capital through advance ticket sales, not to sell tickets more than a month in advance. That restriction came after the airline cancelled around 1,800 flights in December which, along with reports of unpaid salaries, prompted the regulator into moving fast to prevent a repeat of what happened with Kingfisher Airlines Ltd, the debt-laden airline that was grounded in 2012. While SpiceJet’s promoters have agreed to stand guarantee for loans extended by banks to the airline, the promoters will not be able to infuse further equity into the airline at the moment, according to S.L. Narayanan, group chief financial officer of Sun Group, Spicejet’s parent. Narayanan said the promoters have been consistently supporting SpiceJet ever since they acquired a controlling interest in late 2010.
“Total loss funding support has been in excess of Rs.800 crore till date. And additionally the promoters have offered shares in SpiceJet as collateral to raise working capital loans from banks from time to time. We sought help from government of India only when we hit a dead end with banks,” Narayanan said. Asked about SpiceJet’s turnaround prospects, Narayanan said “very difficult but not impossible.” “The crude prices have fallen by 40% in the last six months, we have cut capacity, flying more hours per day, weeded out all loss making routes and cut out the flab,” he added.