SpiceJet says no to seeking insolvency proceedings, to fly grounded planes
SpiceJet says it will spend $ 50 million availed as emergency credit from the government besides internal cash accruals to get its grounded aircraft airborne
Days after lessors of SpiceJet moved the Directorate General of Civil Aviation (DGCA) for the deregistration of aircraft, the airline refuted reports of considering claiming insolvency.
On Thursday, SpiceJet clarified various reports that suggested it was all set to follow in the footsteps of Go First in declaring voluntary insolvency. Go First moved the National Company Law Tribunal (NCLT) earlier this month under the Insolvency and Bankruptcy Code.
SpiceJet chairman and managing director Ajay Singh in a statement said that the airline was using the $50 million funds it received from the government's Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash accruals to revive its grounded fleet.
The airline's decision to use the funds to restore its fleet is part of its effort to bounce back from the impact of the COVID-19 pandemic on the aviation industry.
Despite this positive development, the shares of the airline fell by 1 per cent to Rs. 29.62 in the afternoon trade on the BSE.
Last week, the airline announced plans to revive 25 grounded aircraft. The airline has around 80 planes in its fleet and is looking to revive 25 grounded Boeing 737 and Q400 aircraft.
Industry reports suggest that SpiceJet has 34 aircraft currently grounded. These include two 737-700s, one 737-700 converted freighter, two 737 MAX 8's, seven 737-800s, two 737-900ERs, and twenty Dash-8-Q400 regional aircraft.
SpiceJet has not shared when or which aircraft will return to service. It is also unclear which portion of the carrier's expenses to return the aircraft would be funded by ECLGS and what would be supported by the cash accruals.
Earlier this week, a few lessors of low-cost airline SpiceJet Ltd submitted requests to the aviation regulator to deregister three aircraft, as per the Directorate General of Civil Aviation (DGCA). This move could impact the operations of any airline struggling to keep up with the demand amid the ongoing COVID-19 pandemic. The airline has been facing several challenges in the past few months, and this latest setback adds to its troubles.
In a Business Today report, SpiceJet is quoted as saying that two of the three planes have been grounded for an extended period now, which doesn’t affect our operations. "We hold a very good relationship with the lessor and are in discussion to resolve the matter. We have been working to bring back our grounded fleet basis the loan sanctioned under the ECLGS scheme," the airline said.
(With inputs from PTI)