New Delhi: Talks between Ajay Singh and SpiceJet promoters, the Maran family, may break down over payment of certain liabilities. Singh is the former promoter of SpiceJet who is now leading fresh investments into the beleagured airline along with two US-based private equity funds. Marans want to exit the airline completely and have been in negotiations with Singh to sell out. Sources tell us Singh has said he wants the Marans to pay nearly Rs 1100 crore in liabilities arising from aircraft lease rentals and advance bookings which SpiceJet has made till October 2015. SpiceJet owes a large sum of money to lessors for its Boeing fleet.
Singh wants the Marans to pay this amount even as he along with PE funds continued with due diligence of SpiceJet before bringing in about $200 million in fresh funds to save this cash starved airline.
Sources tell us the Marans have not agreed to pay this amount in a crucial meeting held with Singh and others this evening. And that Singh may insist on the payment or back out of the entire deal. Neither Singh nor the Marans responded to phone calls and text messages seeking comments.
Meanwhile, an official in the Ministry of Civil Aviation said the Airports Authority of India has extended credit to SpiceJet till 10 January. The airlines owes well over Rs 200 crore in dues to the AAI, it was earlier expected to clear the dues by 31 December as Singh was expected to bring in some "token" amount by then but the new deadline was given since no money came in till then.
A source who was privy to meetings between the SpiceJet management, Singh and a raft of ministry top brass last fortnight, had said earlier that the airline has sought deferment of payment of service tax dues and also wants payments to oil companies be deferred by a month. It was payment of tax arrears (service tax and IT) in November which actually lead to the present crisis at SpiceJet as it fell short of cash even for daily operations. There is no clarity on whether its requests have been granted by the ministry. Oil companies have in the past made it clear that unless SpiceJet pays each time it lifts fuel, it will not be given any fuel.
As SpiceJet lurches into another liquidity crisis, it is clear that the promoters - the Maran family - have decided to completely exit the airline. A person privy to developments pointed out that Singh and his team want to run the airline with their choice of management, making it clear that some sort of a management rejig is also imminent. This person pointed out that in its present form, the airline is "top heavy" with some people in the top management drawing unacceptably high salaries. "Whenever there is a change in ownership, there has to be a change in management," this source said without elaborating. He said Singh wants to get back to the airline he exited some years back because he sees immense potential in the Indian aviation industry. Besides, SpiceJet has airport slots, aircraft and all the paraphernalia for running an airline and investing in it would be cheaper than starting an airline from scratch.
But given today's developments, will Singh and his band of investors still be willing to bear the SpiceJet cross?