Budget carrier SpiceJet – while also dealing with a series of mid-air incidents over the past weeks – needs recapitalisation to keep flying and compete with existing and new airlines, industry watchers told Livemint. SpiceJet Wednesday posted a worse-than-expected net loss of ₹789 crore for the June quarter – this amid cheerful forecasts for the aviation sector.
Hit by high fuel prices and depreciation of the rupee, SpiceJet said its board had approved raising up to ₹2,000 crore. On Friday, sources told news agency PTI the airline is likely to get around ₹225 crore this week under the Emergency Credit Line Guarantee Scheme (ECLGS).
The ECLGS was set up by the government to help companies deal with the impact of the Covid pandemic; it provides guaranteed coverage to banks and NBFCs to enable them to extend emergency credit to various industries to meet working capital requirements.
SpiceJet will use this money to clear statutory dues and other payments to lessors.
Chief financial officer Sanjeev Taneja resigned last week with the airline deep in crisis. The board has identified a replacement, who is expected to join later this week.
The carrier has faced a series of headwinds for over three years now. The grounding of the fuel-efficient Boeing 737 MAX in March 2019 after two fatal accidents and the pandemic both severely affected the already struggling airline.
Apart from facing financial turbulence, SpiceJet aircraft have been involved in a series of incidents in the past weeks, following which the Directorate General of Civil Aviation (DGCA) had issued a show-cause notice to the airline.
As of now, SpiceJet is allowed to operate only up to 50 per cent of its capacity until October.
“Don’t know if it is a case of bad timing but… somehow SpiceJet has frequently found itself in a mess. However, its operations are comparatively smooth since it started operating at 50% of the capacity,” a senior official told Livemint.
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