SpiceJet seeks three-month moratorium on lease rent; Crisil downgrades budget airline's loan facilities

Budget airline SpiceJet has reportedly sought a three-month moratorium from a leasing company as "a delay in delivery of 737 Max planes by Boeing Co. has caused liquidity issues", rating agency Crisil Ltd said.

According to Business Standard, Jet Airways has also sought a moratorium on lease rent payment in order to avoid a default on loan payments. The report said that a weakened rupee, the surge in crude oil prices and the inability to raise fares have put pressure on all airlines.

Crisil has also downgraded the SpiceJet's loan facilities to 'CRISIL BB-/Negative/CRISIL A4' from 'CRISIL BBB/Stable/CRISIL A3+'.

 SpiceJet seeks three-month moratorium on lease rent; Crisil downgrades budget airlines loan facilities

Representational image. Reuters

"The downgrade reflects CRISIL's belief that SpiceJet's operating performance will remain under pressure in the near to medium term, driven by significant increase in the operating cost and limited ability to pass on the increased cost to customers due to intense competition, Crisil said in its report.

The rating agency said that Aviation turbine fuel (ATF) prices have increased by 10 percent and Indian rupee depreciated 7.9 percent over the last three months. "Despite such a sharp increase, airlines could not increase prices due to intense competition, with the second quarter being inherently weak, " Crisil said.

SpiceJet recently inducted its first Boeing 737 MAX 8 aircraft that forms part of a $22 billion purchase deal signed with the American aircraft manufacturer. "SpiceJet had signed a $22 billion deal with Boeing for up to 205 aircraft in 2017 and this is the first aircraft delivery from that order," a company statement said on 12 October.

"These new aeroplanes will enable us to open new routes, and will dramatically reduce noise pollution and greenhouse gas emissions. Passengers will benefit from a large number of premium seats and, for the first time in India, broadband internet on board," SpiceJet Chairman Ajay Singh said in a statement.

The budget airline reported a standalone net loss of 38.06 crore for the quarter ended 30 June, 2018. The airline had reported a net profit of Rs 1,75.23 crore during the corresponding month of the previous fiscal.

With inputs from IANS.

Updated Date: Oct 23, 2018 12:54:03 IST