Low-cost carrier SpiceJet – while also dealing with a series of mid-air incidents in recent weeks needs a recapitalization to continue flying and compete with existing and new airlines, industry watchers told . SpiceJet on Wednesday reported a worse-than-expected net loss of ₹789 crore for the June quarter amid upbeat forecasts for the aviation sector. Hit by high fuel prices and rupee depreciation, SpiceJet said its board has approved an increase of up to ₹2,000 crore. On Friday, sources told that the airline is likely to get around ₹225 crore under the Emergency Credit Guarantee Scheme (ECLGS) this week.
ECLGS was set up by the government to help companies deal with the impact of the Covid pandemic; provides guaranteed cover to banks and NBFCs to enable them to extend emergency credit to various industries to meet working capital requirements. SpiceJet will use this money to pay statutory fees and other payments to lessors. CFO Sanjeev Taneja resigned last week as the airline was deep in crisis. The board has named a replacement to join later this week. The carrier has been dealing with a number of headwinds for more than three years. The grounding of the fuel-efficient Boeing 737 MAX in March 2019 after two fatal crashes and the pandemic hit the already struggling airline hard.
Apart from facing financial turmoil, SpiceJet planes have been involved in a series of incidents in recent weeks, following which the Directorate General of Civil Aviation (DGCA) issued a show cause notice to the airline. From now, SpiceJet is only allowed to operate at 50 percent of its capacity till October. “I don’t know if it’s a case of bad timing, but… SpiceJet has somehow found itself in a mess quite often. However, its operations are relatively smooth as it has started functioning at 50% capacity,” a senior official told .
