Spicejet Meets Banks For Additional Funds Amid Cash Crunch

SpiceJet has reportedly implemented a plan to revive its 25 inactive planes, following a petition by its operational creditors to initiate bankruptcy proceedings, which prompted discussions with Indian banks for additional funding.

In an effort to secure the necessary funds, the low-cost airline is said to be exploring options such as the Emergency Credit Line Guarantee Scheme (ECLGS) provided by the government and increasing cash inflows. To support the revival of its grounded fleet, SpiceJet has already secured over Rs. 400 crores in funding, which is expected to boost its revenue. While the airline has stated that it is engaged in negotiations with its creditors, the NCLT has issued a notice, rather than an order, and scheduled a hearing for May 17. SpiceJet is expected to have an outstanding debt exceeding over Rs 10,000 crore.

SpiceJet’s Chairman and Managing Director, Ajay Singh, has categorically denied the possibility of the airline undergoing insolvency proceedings and dismissed any rumours to that effect as baseless. In recent weeks, Aircastle, which leases aircraft to SpiceJet, filed a petition with the National Company Law Tribunal (NCLT) to commence insolvency proceedings against the airline, citing unpaid debts. SpiceJet has been struggling with financial losses since the fiscal year 2019.

To address its financial challenges, SpiceJet’s management has explored options to raise additional capital from various institutions, including the Union Bank of India. Recently, a few operational creditors have filed a petition with NCLT, seeking to trigger insolvency proceedings against the budget carrier. Despite SpiceJet’s assertion that it is engaged in discussions with creditors, the NCLT has not issued any orders against the airline so far.

A warning was issued by the tribunal to the carrier following contact by Aircastle (Ireland) Ltd, with the hearing scheduled to reconvene on May 17th. On April 28, Aircastle filed a complaint against SpiceJet, which had secured Rs 400 crore under the ECLGS scheme to revive 25 grounded aircraft. The airline is also in early-stage discussions with lenders to secure additional funding.

SpiceJet’s fleet is currently grounded, but the company is striving to bring more planes back into operation, using both internal resources and the $50 million obtained through ECLGS, as stated by Singh. According to data from aviation analytics firm Cirium, SpiceJet Airlines has a total of 82 aircraft, with 31 being held in “storage” and the remaining 41 currently in use. An aircraft is classified as “in storage” if it has not flown commercially for 30 consecutive days.

Singh has affirmed that the company has forged exceptional bonds with all their partners. He expressed gratitude for the unwavering support and trust of their lessors who have been with them every step of the way, even in the face of obstacles. SpiceJet has made it clear that they want to dispel any rumours that may have surfaced due to their rival airline’s announcement (Go First). The company is fully devoted to its operations and is presently exploring potential investors to secure funding.

SpiceJet has clarified that the recent notification from the NCLT did not result in any unfavourable ruling against the airline and that the notification was issued in an expected manner. The court has recognized that the parties are engaged in settlement negotiations, which can now continue. Prior to this, SpiceJet had made it explicitly clear that it did not possess any Aircastle aircraft and that the latter’s appeal to the NCLT would not impede the airline’s regular operations. According to reports, two additional insolvency applications related to SpiceJet are currently pending before the tribunal. Acres Buildwell submitted one appeal on February 4, while Wills Lease Finance Corporation submitted another on April 12.

Proofread & Published By Naveenika Chauhan