New Delhi: 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 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.
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. 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 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 fin-ancing for which the promoters (main shareholders) are willing to provide a guarantee,” S.L. Narayanan, CFO of Sun Group, SpiceJet’s parent, said.“We cannot do more than this.” SpiceJet owes about Rs 600 crore to oil companies and airport authorities, he said.
