The parent company behind SpiceJet Ltd said on Wednesday it could not afford to spend what could be hundreds of millions of dollars to rescue the beleaguered low-cost airline, raising questions over its future.
SpiceJet is staring at a financial collapse after its efforts to find an investor failed. It needs an immediate infusion of about Rs. 2,000 crore to survive.
Controlled by billionaire Kalanithi Maran, SpiceJet needs at least $300 million to stabilise and recover, consultancy CAPA estimates, an amount its parent says it does not have.
"We do not have the liquidity to invest large sums at this time, which is why we need bank financing for which the promoters (main shareholders) are willing to provide a guarantee," SL Narayanan, chief financial officer of Sun Group, SpiceJet's parent, told Reuters in an interview.
"We cannot do more than this."
SpiceJet was granted a reprieve on Tuesday after the government asked suppliers to give it more time to pay its bills. But it was still forced to ground its entire fleet on Wednesday after oil firms refused to refuel its planes.
The flights reportedly resumed after 4pm following a disruption of nearly 10 hours. SpiceJet COO Sanjiv Kapoor tweeted an apology to all passengers inconvenienced by the delay in services.
Earlier in the day, scores of passengers were left stranded at the Delhi Airport after their flights were cancelled at the eleventh hour. SpiceJet passengers were left stranded in Mumbai for the same reason Tuesday.
Not even a single SpiceJet flight could take off since Wednesday morning due to fuel supply issue with the oil companies, stranding hundreds of passengers across the country.
Loss-making SpiceJet is racing against time to avoid meeting the same fate as Kingfisher Airlines, which stopped flying in 2012 and left billions of rupees in unpaid debts.
That high-profile implosion was an embarrassment for India's aviation industry. Its creditors' inability to claw back cash also fuelled a debate over India's lack of rules to guide troubled firms through liquidation or restructuring, prompting questions that remain largely unresolved.
SpiceJet owes about 6 billion Indian rupees ($94 million) to service providers such as the oil companies and airport authorities, Narayanan said. Its net debt stood close to $230 million at the end of September.
The civil aviation ministry said on Tuesday that airport operators would be asked to give the airline 15 days to make payments, while state oil companies would be asked to give credit for up to 15 days.
Two of SpiceJet's biggest fuel suppliers, which together with other creditors are owed nearly $100 million, said they are now fuelling SpiceJet planes, but under strict conditions.
"We are fuelling to the extent that they pay us," a BPCL spokesperson said.
The civil aviation ministry also said banks or other financial institutions could be asked to lend up to 6 billion rupees to
SpiceJet, backed by the personal guarantee of Maran.
The measures, the ministry said, were aimed at avoiding a collapse which it said would be a "major setback" for the civil aviation sector.
Shares in SpiceJet closed down 5.4% on Wednesday and have now lost a third of their value this month.
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