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On govt diktat, AAI gives SpiceJet another 10 days' credit

01 January 2015

In a New Year gift to cash-strapped SpiceJet, the civil aviation ministry has told the Airports Authority of India to allow the airline to operate on credit till 10 January.

SpiceJet now owes the AAI around Rs230 crore. Wednesday was the deadline for SpiceJet to pay at least Rs200 crore to AAI towards clearing of dues; but now it has another 10 days of breathing space.

"SpiceJet is adding almost Rs1 crore to its dues every day as it is operating without paying AAI anything. Airlines are supposed to pay landing, parking and navigation charges to the authority for operating at its airports and for availing air traffic control services," said an AAI official.

In further support to the troubled airline (to an extent that Vijay Mallya's failed Kingfisher Airlines failed to get), the ministry had also asked banks to lend money to SpiceJet, along with requesting oil companies to keep giving fuel to the airline on credit. However, none of these agencies complied with its requests.

Only AAI, which is a public sector undertaking under the ministry, followed its diktat. "We are simply following the ministry's orders on SpiceJet. We are not taking any decision on the airline," said a source.

SpiceJet has slashed its daily flights from 345 in summer to about 230 now, as many of its Boeing 737s have been repossessed by lessors due to non-payment of dues. The airline now operates about 18 B-737s, with a sword hanging on five more planes as leasers want to take them back. The LCC had cancelled about 1,800 flights last month and 3,450 flights are expected to be cancelled in January (due to the daily reduction of 115 flights).

As reported earlier, SpiceJet's former promoter Ajay Singh is in talks with a unit of US-based J P Morgan Chase and some other private equity funds to invest about $200 million in the airline. Its current promoter, Sun Group chief Kalanithi Maran, has not come to the airline's rescue and SpiceJet awaits the outcome of Singh's funding efforts, which will be known by the month-end.

The carrier's dues to foreign and Indian vendors, airport operators and oil companies are learnt to have grown from Rs990 crore to Rs1,230 crore between 24 November and 10 December.

The airline's dues to foreign vendors, including lessors of aircraft and maintenance, repairs and overhaul (MRO) facilities, had risen from Rs624 crore to Rs742 crore in the same period. SpiceJet owes banks Rs300 crore against collateral.

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