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Debt-ridden budget airline SpiceJet plans to receive an additional ₹1,000 crore as part of the newly modified Emergency Credit Line Guarantee Scheme (ECLGS). The additional funding will help the airline clear all statutory dues, lessor payments, sources aware of the matter said.
The Finance Ministry has allowed airlines to avail themselves of loans up to 100 per cent of their requirement under the ECLGS, subject to conditions. This modification comes at a time when many airlines are in the red.
The company, with the funds, will look to induct brand-new Max (Boeing) planes and operate a younger fleet which will increase operational efficiency and “support cash-profitable operations”.
Payment of dues, post receipt of funds will “significantly reduce cost burden and older dues”, an official said adding that “an additional funding of more than $100 million into SpiceJet settles the survivability debate once and for all”.
The airline, it is being said, is already looking at a fund raise of $200 million. And this new funding will “provide added impetus to that”.
According to Ajay Singh, Chairman and Managing Director, SpiceJet, the aviation and finance ministries have been taking up issues and problems being faced by airlines post-Covid in a speedy manner and it is “nothing but remarkable”.
“This latest decision of enhancing the ECLGS limit for the troubled airline sector will provide a tremendous boost for airlines. I request the government once again for its support for including Aviation Turbine Fuel under GST, which would be a game changer for the entire sector,” he said.
Losses cause concern
For the June quarter (Q1FY23), the airline’s losses were ₹789 crore as against the ₹729 crore it reported in the year-ago period.
In FY22, the airline’s losses were ₹1,725 crore versus ₹998 crore in FY21.
The airline’s auditors, Walker Chandiok & Co LLP, while reviewing the Q1 FY23 accounts, said the group’s accumulated losses amount to ₹6,747 crore “which have resulted in complete erosion of its net worth”. The current liabilities have exceeded its current assets by ₹6,772 crore, as of June 30. They have expressed concern over the airline’s ability to continue as a going concern.
“However, the management is of the view that the going-concern basis of accounting is appropriate,” it said in a qualifying opinion.
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