Following a spate of incidents on the cash-strapped airline, the Directorate General of Civil Aviation (DGCA) had on July 27, 2022, imposed this restriction for eight weeks and said any enhancement in flights will be allowed only when SpiceJet is able to prove it as the financial resources to safely do so.
Now that the eight-week period is ending without SpiceJet getting recapitalised, the regulator revised the situation and on Wednesday said the airline has seen an “appreciable reduction in number of safety incidents.”
But as a “matter of abundant caution, (it) has decided that the restriction imposed in the July 27 order shall continue to be in force till the end of the summer schedule — October 29, 2022,” says an order issued by Maneesh Kumar, DGCA joint DG on Wednesday.
Kumar’s order says “any increase in the number of departures beyond 50% approved under summer schedule 2022, during this period, shall be subject to the airline demonstrating to the satisfaction of DGCA that it has sufficient technical support and financial resource to safely and efficiently undertake such enhanced capacity. During this period, the airline shall be subject to enhanced surveillance.”
SpiceJet promoter has been trying to raise funds and is in talks with various players for stake sale. However so far there has been no recapitalisation.
As a result, SpiceJet has been delaying paying whatever percentage of salaries it gives to employees; is not paying PF to many staffers and is yet to give Form 16 of last fiscal. It has sent 80 pilots on leave without pay for three months.
The only lifeline has been a credit facility of about Rs 200 crore under the emergency credit line guarantee scheme (ECLGS).
The airline’s troubles have been mounting in the past few months due to its inability re-capitalise so far despite reported attempts to sell stake to raise about Rs 2,000 crore.
In the past few months, six Boeing 737 rented to it have been repossessed by lessors. SpiceJet’s chief financial officer (CFO) Sanjeev Taneja resigned with effect from August 31, 2022. The airline lost Rs 1,725 crore in FY 2022. The company’s accumulated losses as on March 31, 2022, were Rs 5,912.6 crore. I
Its net worth has completely eroded, with current liabilities exceeding its current assets by Rs 6,408.7 crore as on March 31, 2022.
SpiceJet has for nearly a year been saying that it will get more Boeing 737MAX. Industry sources say the question is whether it can manage to finance those aircraft.
“Lessors know the situation in airlines and are extra cautious when it may seem that an airline is doing the sale and lease back of aircraft only to raise funds through that methods,” said an industry insider.