Low-cost carrier SpiceJet – while dealing with a string of in-flight mishaps in recent weeks – needs recapitalization to keep flying and compete with existing and new airlines, industry watchers have said. industry at Livemint. SpiceJet on Wednesday posted a worse-than-expected net loss of ₹789 crores for the June quarter – this amid cheering forecasts for the aviation sector.
Hit by high fuel prices and the depreciation of the rupee, SpiceJet said its board had approved an increase of up to ₹2,000 crore. On Friday, sources told the PTI news agency that the airline is likely to move ₹225 crore this week under the Emergency Credit Line Guarantee Scheme (ECLGS).
The ECLGS was set up by the government to help businesses cope with the impact of the Covid pandemic; it provides guaranteed cover to banks and NBFCs to enable them to extend emergency credit to various industries to meet working capital needs.
SpiceJet will use this money to pay legal dues and other payments to lessors.
Chief Financial Officer Sanjeev Taneja resigned last week with the airline in the midst of a crisis. The board has identified a replacement, who is expected to join later this week.
The carrier has faced a series of headwinds for more than three years now. The grounding of the fuel-efficient Boeing 737 MAX in March 2019 after two fatal crashes and the pandemic have both severely affected the already struggling airline.
In addition to the financial turmoil, SpiceJet planes have been involved in a series of incidents in recent weeks, following which the Direction Générale de l’Aviation Civile (DGAC) issued a show cause notice to the airline.
Currently, SpiceJet is only allowed to operate up to 50% of its capacity until October.
“I don’t know if it’s bad timing but… somehow, SpiceJet has often gotten into trouble. However, its operations have been relatively smooth since it started operating at 50% capacity,” a senior official said. Living mint.