SpiceJet in dire need of recapitalisation to revive operation: Report

The carrier has been strong in its pursuit of weathering the storm but it has faced a series of headwinds for more than three years. The company reported huge loss in April-June quarter

Indian budget airline, SpiceJet Ltd, is in a dire need of recapitalisation to successfully come out of the financial storm, say industry experts, a media reported on Monday.

According to a Livemint report, the company needs capital infusion to compete with the already existing and newly launched airlines.

The company reported huge loss in April-June period of this quarter with its Chief Financial Officer Sanjeev Taneja resigning. From the grounding of the fuel-efficient Boeing 737 MAX in 2019 to deregistering of six aircrafts in August 2022 due to non-payment of dues to lessors, SpiceJet is witnessing a sense of unrest among its employees as their salaries are yet to be resumed to the pre-Covid levels.

According to experts quoted in LiveMint report, the carrier is confident of resuming full operations once the curbs are lifted. The budget airline has been lucky to get funding for its survival, say analysts in the report. 

The company is likely to get around Rs 225 crore this week under the central government's Emergency Credit Line Guarantee Scheme (ECLGS) to clear its dues, Business Standard reported on September 2. 

The airline has been making losses for the last four years. Moreover, it is currently operating fewer than 50 per cent flights, following the July 27 order of Directorate General of Civil Aviation (DGCA) in the wake of a spate of incidents.

The Centre in 2020 had started the ECLGS to provide collateral-free and government-guaranteed loans to businesses affected by the coronavirus pandemic.

Under ECLGS, an aviation sector company can get a loan of up to 50 per cent of its total credit outstanding across all lending institutions. However, the amount borrowed by the company can not be more than Rs 400 crore.

SpiceJet incurred net losses of Rs 316 crore, Rs 934 crore, Rs 998 crore, and Rs 1,725 crore in FY19, FY20, FY21 and FY22, respectively.