The Government seems to have given a full bailout package for SpiceJet its denials not withstanding. Not only has the airline been given credit line by AAI and oil companies, the govt is now urging banks to provide it fresh loan and has asked the Finance Ministry to ease external commercial borrowing (ECB) norms for the co. In short, the Govt is doing everything possible to stop SpiceJet's demise
Interestingly, the airline's flights across many airports were delayed this morning. Sources said this happened as oil companies refused to fuel SpiceJet planes since the airline owes them money. They said the situation was better in the second half of the day, perhaps after reports of the Government providing relief to SpiceJet began trickling in.
According to sources, this afternoon the DGCA withdrew its earlier order which had barred SpiceJet from taking advance bookings beyond 30 days. The airline has now been permitted to take bookings up to 31 March, 2015. This comes as a huge relief for two reasons - the airline can now take fresh bookings till March and can honour those made earlier, saving it precious outgo in refunds due to cancellations.
Then, two other arms of the government moved swiftly to bend under pressure from the ministry of civil aviation. SpiceJet has been allowed to use airports under the Airports Authority of India (AAI) for the next fortnight without having to make payments. It owes Rs 200 crore to AAI and another about Rs 80 crore to other airport operators across the country. AAI had threatened to put SpiceJet on cash and carry from Monday this week - which would have meant that the airline would have been asked to pay before each flight takeoff.
Also, oil marketing companies, to which SpiceJet owes dues, have been asked to give the airline a credit line till December 31. According to ministry officials, SpiceJet owes them only Rs 14 crore and it would be incorrect to compare the situation of the airline now with what happened to Kingfisher Airlines before it shut operations two years back.
In a PIB release, the govt said "Indian banks may be requested to give some working capital loan based on the assurances of the promoter. Banks or Financial institutions to lend up to Rs 600 crore backed by a personal guarantee of the Chairman, Spice Jet. This should be paid immediately after securing the long term investment which will take around 8 weeks to consummate."
The release added, "Ministry of Finance will be requested to permit External Commercial Borrowing (ECB) for working capital as special dispensation"
With forward bookings allowed and no immediate payments to airports, oil companies and a fresh loan, SpiceJet seems to have got a breather for sure.
With forward bookings allowed and no immediate payments to airports and oil companies, SpiceJet seems to have got a breather for sure. But only for a fortnight.
A senior ministry official denied any plans to either stand guarantee to any loan that SpiceJet might raise from banks now or to provide a soft loan to the airline directly. This official said no such proposal was being considered and there was no specific package being devised to help just one airline.
"We want to ensure convenience of passengers which is why these steps have been taken. There is no bailout package for any airline," this official said.
Yesterday, the same official had said that SpiceJet's immediate payouts are about Rs 1400 crore though its total dues to various stakeholders stand at about Rs 2000 crore.
Another ministry official said the airline owes Rs 300 crore to banks, Rs 280 crore to airports and Rs 14 crore to oil companies. That only means the remaining about Rs 800 crore could be dues the airline owes to lessors in lease payments for aircraft.
The first official said there is no information with the ministry about any plans by SpiceJet promoters, the Maran family, to pump in more money into the airline. He said the promoters have already pumped in Rs 500 crore this fiscal and there is no clear proposal from any potential investor either.
According to estimates by global aviation consultancy CAPA, SpiceJet needs immediate funds' infusion of Rs 1000 crore.