Don't let lessors repossess aircraft, give SpiceJet credit on oil, service tax: Ajay Singh

New Delhi: SpiceJet’s new promoter Ajay Singh wants some more Government hand holding as he tries to put the airline back on its feet. Not only has he requested aviation regulator DGCA to not allow aircraft lessors to take back leased planes, Singh also wants to pay only a fourth of the service tax dues and even wants a Rs 100 crore credit from oil companies. How many of his requests will finally be accommodated remains to be seen. His require approval from not just the Ministry of Civil Aviation but also regulator DGCA and ministries of finance and petroleum. A source said that Singh has written a letter to the regulator and to the ministry earlier this week, emphasising that if even one more aircraft is repossessed by lessors, SpiceJet’s revival plans will suffer. The airline operates a fleet of Boeing 737 and Bombardier Q400 aircraft. Lessors like BBAM, BOC and AWAS have been meeting the regulator, asking her permission to take back 11 Boeing aircraft in all because SpiceJet has been falling behind on lease payments. Its Boeing fleet has already been reduced to almost half over the last several months as planes have had to be returned due to mounting lease dues. As of last month, the airline owed almost Rs 700 crore in dues to lessors. [caption id=“attachment_2071519” align=“alignleft” width=“380”] AFP image[/caption] But a senior official in the ministry of civil aviation indicated that the airline may make a second tranche of payments to its lessors by Monday to stave off repossession. He did not indicate the amount though. “Spicejet’s revival is on track and even the talks with lessors are progressing well. They have been given time till February 9 to make the second tranche of payments to lessors, they have already paid some amount once,” this official said. Then, the source quoted earlier said Singh has also requested that the service tax payments be reduced to just 25% of the daily amount of Rs 2 crore. He also wants oil companies to provide SpiceJet Rs 100 crore credit since as of now, the airline has to make payments each time it lifts fuel. In December SpiceJet was briefly grounded due to severe cash shortage which led to oil companies refusing it fuel. At that time, intervention by ministry officials had failed to convince oil companies about extending credit to SpiceJet. There is little likelihood of their changing their mind now. On the service tax front too, Singh’s requests may merely fall on deaf ears. The ministry official quoted earlier said the airline has begun paying Rs 3 crore a week to the Airports Authority of India (AAI), to which it owes close to Rs 300 crore. He said these payments began a week or two back and the airline has also promised fresh bank guarantees to AAI for the remaining amount soon. Another person close to developments at SpiceJet said the commencement of sales - two discount offers have come in the last two weeks - has lead to a “good” increase in cash generation at the cash-strapped airline. He said any payments to lessors and other creditors next week may depend on whether the outgoing promoters, the Marans, fulfill their commitments and bring in some cash before February 15. As per the turnaround plan of SpiceJet approved by the Ministry of Civil Aviation, the Marans have to bring in about Rs 400 crore by that date. Singh has promised a total investment of Rs 1500 crore in SpiceJet by April.