Ajay Singh invests Rs 100 cr over weekend, but lessors may hamper SpiceJet revival

New Delhi: Spicejet may be compelled to take 11 Boeing 737 aircraft on fresh lease from two airlines this week. Unending troubles with at least three different aircraft lessors may force the airline’s incoming promoters to take this step, sources tell us. Three different lessors have reportedly stuck to their demand to repossess 11 Boeing 737 aircraft which are currently with SpiceJet because of delays in payment of lease rentals. They have already petitioned aviation regulator DGCA on this matter since its nod is required for repossession. It is possible that they start taking back aircraft by the middle of this week, a source told Firstpost.[caption id=“attachment_2064019” align=“aligncenter” width=“380”]  Two SpiceJet aircraft. AFP[/caption] If that happens, SpiceJet’s fleet will be severely depleted which is perhaps why the airline has been negotiating with a budget airline of the Gulf for leasing eight aircraft and also with another airline to get the remaining three aircraft. This could mean a temporary reprieve for the airline from paying current lease rentals but the leasing costs may go up in fresh contracts which may be forged in a hurry. Besides, this may throw a spanner in Ajay Singh’s plan to expand the current Boeing fleet from 19 now to 26 quickly. SpiceJet has already shrunk its Boeing fleet from a peak of 35 to 19 due to cash woes and consequently reduced daily flights. Singh along with others is in the process of acquiring over 58 percent stake in SpiceJet and has promised Rs 1,500 crore total investment into the cash strapped airline. Fleet expansion is a crucial part of Singh’s plan to revive the airline and this trouble with lessors could not have come at a worse time. In all, SpiceJet owes close to Rs 700 crore to lessors in rentals. The 19 Boeings in the fleet as of now come from seven different lessors. SpiceJet has 15 Q400 Bombardier aircraft in its fleet in addition to the Boeings. In another development on SpiceJet’s revival plans, Rs 100 crore was invested into the airline over this weekend by Singh and his consortium of investors. Singh confirmed the investment to Firstpost without giving any further details. According to Singh’s recapitalisation plan cleared by the Ministry of Civil Aviation last week, Rs 400 crore more will be invested by him by 15 February. Then, two equal tranches of Rs 500 crore are expected in March and April respectively. In its clearance of the investment plan proposed by Singh, the Ministry has not specifically made any reference to an exemption from any open offer. The ministry has merely said that the plan is being cleared as long as it complies with existing FDI caps, Sebi regulations and those of FIPB and DIPP in respect of the foreign airline investment cap. Now, not only does Singh have to negotiate for fresh lease of 11 aircraft, he will also have to wait for the crucial decision by Sebi on the open offer conundrum. A senior ministry official had said last week it was for Sebi to take a call, the ministry has merely approved the proposal of management change at the airline. As of now, SpiceJet owes almost Rs 1,600 crore to various creditors; it needs to not only convince aircraft lessors but also renegotiate other contracts to bring down costs substantially. The airline has fallen behind on salaries, payments to creditors and all of this needs to be sorted out quickly.