New Delhi: Cash-strapped airline SpiceJet yesterday said that it will cancel 300 more flights till January 31, even as the government seemed to rule out any help by saying the budget carrier will have to itself resolve its financial troubles and the Airport Authority of India (AAI) asked it to pay Rs2bn dues by today.
The latest update on the airline’s website states that over 300 flights have been cancelled till January 31, 2015. Earlier the troubled airline had truncated its operations by canceling over 1,800 flights till December 31, 2014.
Commenting on the airline’s troubles, Civil Aviation Minister Ashok Gajapathi Raju said that the budget carrier will have to resolve its financial problems on its own and that the government can only be a facilitator in the revival process.
“Government is here to be helpful but the SpiceJet problem is its finances which it will have to sort out,” the minister told reporters on the sidelines of State Aviation Ministers’ meet held here to discuss the draft Civil Aviation Policy. Earlier, the government had given a 15 day interim relief to the airline by calling on oil companies and state-run Airports Authority of India (AAI) not to collect dues till today.
The airline has so far paid its dues to the oil companies, but it has to provide a Rs2bn bank guarantee to AAI by December 31, failing which the state-run entity has threatened to put it on a cash-and-carry payment mode.
Airlines usually pay monthly charges to the airport operators. But under the cash-and-carry mode, they have to make daily payments for operations or every time they use various facilities of the airport, including navigation, luggage handling, parking, housing and landing charges of the aircraft as well as the ticketing counters. The development comes a day after the troubled airline failed to submit a cash flow plan to the aviation ministry to show that its potential investors are ready to pump in the required funds to keep its operations alive.
On Dec 26, the airline’s management along with new investors submitted a revival plan to the civil aviation ministry, proposing a Rs3bn infusion and a subsequent Rs1.2bn buyout to keep the airline afloat.
The company’s chief operating officer Sanjeev Kapoor along with co-founder Ajay Singh submitted a revival plan which incorporated an equity infusion of Rs3bn which has been backed by banks.
Singh, the co-founder of the airline, had earlier sold his stake in 2010 but is now interested in investing back in the budget carrier to save it from shutting operations. The troubles for the cash-strapped airline started after it recently reported a Rs.310 crore loss in the quarter ended September from Rs5.6bn loss in the corresponding period of last fiscal. The airline had also reduced its fleet size and is now operating only 18 aircraft from a fleet size of 35 earlier this year. It is currently operating 230 flights per day.IANS
