NEW DELHI: Cash-strapped Indian airline SpiceJet said yesterday it has cancelled nearly 1,900 flights across the country for this month, as its financial woes mount.
The no-frills airline, India’s second-largest carrier by passenger share, said it had cancelled a total of 1,861 flights until December 31.
India has a congested airline market where fare competition is fierce and operating costs are high, and all but one of its big four carriers are operating in the red.
Even with as many as 3.3 billion passengers expected to take to India’s skies by the end of 2014, according to the International Air Transport Association, SpiceJet — which has a fleet of 37 — is struggling to stay aloft.
Shares in the airline, controlled by billionaire Kalanithi Maran, are down some 80 percent from a 2007 peak. Its troubles have stirred memories of the failure of liquor tycoon Vijay Mallya’s Kingfisher Airlines, which stopped flying in 2012 after running up huge debts.
The flight cancellations come after Civil Aviation Minister Ashok Gajapathi Raju flagged his deep concern over the airline’s financial health, saying SpiceJet “is giving us heart attacks”.
SpiceJet is 53-percent controlled by Maran, who heads the southern family-owned Sun media group.
While SpiceJet reported a fifth straight quarter of net losses for July-September, its financial performance improved.
Losses in the latest quarter shrank by 45 percent year-on-year to Rs3.1 billion rupees ($50.1m) as the airline cut fares to fill more seats.
SpiceJet laid out a recovery plan two months ago that involved using fewer and newer planes.
The airline has called its turnaround effort a “work in progress” that is gaining momentum.
The company’s shares surged nearly two weeks ago when billionaire investor Rakesh Jhunjhunwala, whose stock picks are closely watched, bought 7.5-million shares or a 1.4-percent stake in the company. But the shares have since fallen back.
SpiceJet has said repeatedly it is in talks with investors about a capital injection but no white knight has yet emerged.
Despite the airline’s problems, a fall in crude prices to a five-year low helped push up its shares by 2.62 percent to Rs15.65
yesterday. Jet fuel represents over 40 percent of an airline’s operating costs. AFP
