SpiceJet gets some breathing space after meeting minister
16 December 2014
Embattled nine-year-old Indian carrier SpiceJet has been given a week's time by the government to submit a financial plan clearly stating how it plans to infuse funds.
At the same time, it is reported that SpiceJet would be able to carry on operations without being put in ''cash and carry'' mode, a badly needed breather for the carrier.
Airline officials met top civil aviation ministry officials in Delhi on Monday seeking some sort of bailout.
On the directions of the Directorate-General of Civil Aviation (DGCA), SpiceJet has already announced on its website that it is unable to take bookings for flights beyond 30 days. Its daily flights have also declined from 332 in September to 239.
The aviation regulator had asked the airline to submit a convincing recapitalisation plan.
SpiceJet needs about Rs1,400 crore immediately, and another Rs600 crore as a long-term infusion.
S L Narayanan, chief financial officer of the parent Sun Group and Sanjiv Kapoor, its chief operating officer, met aviation minister Ashok Gajapathy Raju, minister of state Mahesh Sharma and senior ministry officials.
''SpiceJet has requested for relief. We will first discuss it within the Ministry and then approach the government. No commitment or assurance has been given,'' Mahesh Sharma told journalists later.
The aviation regulator had earlier asked the budget carrier last week to prepare a payment plan for vendors by today. The DGCA has also asked SpiceJet to clear salary dues of all its employees by today.
Reports said there is no investor in sight for the airline owned by billionaire Kalanaithi Maran's Chennai-based Sun group. SpiceJet owes Rs700 crore to lessors and Rs400 crore to other vendors. It has lost money for five consecutive quarters and as of 30 September 2014, its total liabilities exceeded its total assets by Rs1,460 crore.
The carrier has cut its fleet by about a third - from 35 Boeing planes to 22 - in September.
Worried about large-scale cancellations, DGCA withdrew 186 of its slots on 5 December. SpiceJet had said the withdrawal of slots was a "natural outcome of a revised fleet plan".
Spicejet earlier on Monday had reportedly sent a mail to its pilots warning of possible disruption in operations.
"Meeting (between DGCA and Spicejet) will effectively determine future of our company. If all goes well, we can expect to continue operations smoothly and as planned. If for any reason, all does not go well, then expect the following: you will get a call from a senior management pilot. He will brief you in detail as to the situation and necessary further action to be taken. Please do as briefed," the email to pilots read.