Cash-strapped budget airline SpiceJet will receive an additional ₹1,000 crore under the revised Emergency Credit Line Guarantee Scheme (ECLGS) enabling it to “settle the survivability debate”, according to an airline official.
“The additional funding will rejuvenate SpiceJet, help it clear all statutory dues, lessor payments, induct brand new MAX planes, operate a younger fleet which will increase operational efficiency and support cash-profitable operations. The additional funding settles the survivability debate once and for all,” a senior airline executive said.
The airline has already received a credit of almost ₹350 crore under the scheme.
On Tuesday, the Finance Ministry relaxed its ECLGS scheme for airlines, allowing them to seek up to 100% of their fund-based or non-fund based loan outstanding, or an amount upto ₹1,500 crore, whichever is lesser.
Earlier, airlines could get 50% of their outstanding debt or a maximum of ₹400 crore. The scheme, introduced during the COVID-19 pandemic, is valid till March 2023 and allows banks to offer extra loans to existing borrowers without additional collateral. These loans are also fully guaranteed by the government against credit losses.
The airline executive added that with additional credit assured, its prospect for raising another $200 million would improve considerably. The airline’s chairman and managing director, Ajay Singh, recently told journalists that the airline’s board had approved fundraising of ₹1,500 crore to ₹2,000 crore. He also said the airline was in talks with several interested parties, including airlines, for a stake sale.
In July, aviation safety regulator Directorate General of Civil Aviation barred the airline from flying more than 50% of its approved flights for eight weeks, and later extended this restriction for another one month, until October 29. It had reprimanded the airline for “degraded safety” as well as for its inability to pay vendors on time to ensure availability of spare parts and aircraft maintenance.
The airline has seen four consecutive years of losses, which climbed from ₹31.6 crore in the year ended March 31, 2019 to ₹172.5 crore in the last fiscal.
