Several hundred passengers were stranded across India, as fights of budget carrier SpiceJet were grounded on Wednesday. The operations ceased as the oil marketing company (OMCs) which supply fuel to the company refused to provide any credit over non-payment of dues. According to sources at the airline, all flights have been grounded and that the company is in touch with the OMCs to resolve the issue.
The company currently has around 250 departures per day with maximum operations being carried out from Delhi and Mumbai. The OMCs have placed the budget airline in the cash-and-carry mode under which the company has to make spot payments for buying fuel.
Airline sources said that Tuesday order by the ministry giving it interim relief in terms of payment of dues to the airport operators and fuel companies is being studied by the OMCs and that they might restart supply by the afternoon. On Tuesday, SpiceJet was given interim relief by the civil aviation ministry as its promoters were told to infuse fresh equity.
The ministry said that it will request OMCs to give credit to the airline for 15 more days.
The daily fuel cost of the airline is about Rs.5 crores, while it has Rs.14 crore pending with the OMCs.
The ministry had said that banks may also be approached to give some working capital as loans.
”Based on the assurances of the promoter financial institutions would be requested to lend up to Rs.600 crore. This should be paid immediately after securing the long term investment which will take around eight weeks to consummate,” the ministry said in a statement.
Finance Ministry’s approvals have also been sought to permit external commercial borrowing (ECB) as working capital for the airline. The ministry’s relief package had come a day after the company submitted an operations plan for safety and financial revival to the industry regulator.
The company’s top management had also met Civil Aviation Minister Ashok Gajapati Raju Pusapati and his deputy Minister of State for Civil Aviation Mahesh Sharma Monday for relief. The airline has been asking for more time from oil companies and airport operators to pay their dues.
Meanwhile, the scrip of the beleaguered airline has crashed by four percent on the Bombay Stock exchange (BSE) Wednesday at Rs.13.35 per equity.
The airline recently reported a Rs.310 crore loss for the quarter ended September, down from the Rs.560 crore loss in the corresponding period of last fiscal. It is now operating only 26 aircraft from 35 earlier this year. Even the company’s auditors SR Batliboi & Associates have doubted the airline’s ability to stay afloat.