India’s aviation regulator on Wednesday extended an eight-week period after which SpiceJet’s survival efforts were cut to half the originally approved summer schedule. Now this restriction will last until October 29, 2022, when the summer timetable ends. After a spate of incidents of cash-strapped airlines, the Directorate General of Civil Aviation (DGCA) on 27 July 2022 imposed the restriction for eight weeks and said that any flight enhancements would be allowed only if SpiceJet could demonstrate financial resources as do it safely.
Now that the eight-week period is ending without SpiceJet recapitalising, the regulator has reviewed the situation and said on Wednesday that the airline had seen a “significant reduction in the number of safety incidents”. But out of “an abundance of caution, (it) has been decided that the restriction imposed in the July 27 order will continue to be in force till the end of the summer schedule – October 29, 2022,” says the order issued by Maneesh Kumar. , DGCA joint DG on Wednesday. Kumar’s order says that “any increase in departures beyond the 50% approved under the 2022 summer schedule during this period will be subject to the airline demonstrating to the satisfaction of the DGCA that it has sufficient technical support and financial resources to execute safely and efficiently.” thus increased capacity. During this period, the airline will be subject to increased surveillance.’
Promoter SpiceJet is trying to raise funds and is in talks with various players to sell stake. However, the recapitalization has not yet taken place. As a result, SpiceJet is delaying the payment of any percentage of wages it gives to employees; not paying PF to many employees and yet to file form 16 last fiscal. It sent 80 pilots on unpaid leave for three months. The only lifeline was a credit facility of around Rs 200 crore under the Emergency Credit Line Guarantee Scheme (ECLGS).
The airline’s woes have been mounting for the past few months due to its failure so far to recapitalize despite reported attempts to sell a stake to raise around Rs 2,000 crore. In the past few months, six of the Boeing 737s it leased were repossessed by the lessor. . SpiceJet Chief Financial Officer (CFO) Sanjeev Taneja has resigned with effect from August 31, 2022. The airline posted a loss of Rs 1,725 crore in FY2022. The accumulated losses of the company as on March 31, 2022 were Rs 5,912.6 crore. I
Its net worth has completely eroded and as of March 31, 2022, its current liabilities exceeded its current assets by Rs 6,408.7 crore.
SpiceJet has been saying for almost a year that it will get more Boeing 737MAXs. Industry sources say the question is whether it can finance the planes.
“Lessors are aware of the airline situation and are extremely cautious when it may appear that an airline is selling and leasing aircraft solely to raise funds through these methods,” said an industry insider.