As low-cost airline SpiceJet continues to cancel flights across its network owing to its drastically reducing fleet size, rumours of the airline’s impending shutdown have only gained currency on social media. SpiceJet, which started operations in 2006, has cumulative losses of Rs2,194 crore, and Rs300 crore in the quarter between July and September. In fact, the airline has a negative net worth, the amount by which its liabilities exceed its assets of over Rs1,400 crore.
The airline is owned by Tamil media mogul Kalanithi Maran, owner of the Sun TV empire. Maran, who bought the airline in June 2010, has been infusing money constantly into the airline and according to officials has injected Rs250 crore into the airline this year.
However, with the airline struggling to keep up with payments to vendors, leasing companies and even airports and facing losses of Rs2.5 crore per day; it remains to be seen if Maran is willing to put up more money to save SpiceJet, which is having difficulty raising working capital for day-to-day operations. The airline has already cancelled 1,861 flights in December and reduced its fleet size, particularly Boeing 737 aircraft, to reduce daily costs.
Maran bought into the airline at over Rs47/share in 2010; the share price stood at Rs21.25 on December 1, but collapsed to Rs13.55 on Monday as the market seems to be giving up hope in the airline. In a meeting with officials from the Directorate General of Civil Aviation (DGCA), sources said that the airline had requested the Government for help, specifically for the Government not to put the airline on a ‘cash and carry’ basis with the Airports Authority of India (AAI) and the Oil Marketing Companies.
Sources close to SpiceJet noted that the airline was still operating flights as of Sunday night, however there were no guarantees whether the airline would be operating flights unless the Civil Aviation Ministry intervenes. Minister of State for Civil Aviation Mahesh Sharma said that SpiceJet’s requests will be looked into and the Prime Minister’s Office will take a call on the matter.