NEW DELHI: As insolvency issue of SpiceJet it’s heating up after the Directorate-General for Civil Aviation gave the company a red flag (DGCA) had hinted at the long-awaited troubles for the aviation giant.
Last year, the DGCA warned the airline after noticing various irregularities in its service.
“The financial assessment conducted by the DGCA revealed that SpiceJet operates with cash and carry and suppliers/approved suppliers are not paid regularly, resulting in a shortage of spare parts and frequent use of the Minimum Equipment List (MEL)… SpiceJet derived from this.” It failed to set up a safe, efficient and reliable air service,” according to a 2022 order.
The aviation regulator had also imposed some restrictions on the airline. “In light of the results of various spot checks, inspections and the response to the show notice to maintain a safe and reliable air service, SpiceJet’s number of departures is hereby limited to 50% of the number of departures authorized during the summer flight schedule of eight weeks from the 27 July 2022. Any increase in the number of departures over 50% of the number of departures authorized in the 2022 summer timetable during this period will require the airline to demonstrate to the satisfaction of the DGCA that “It has sufficient technical support and financial resources to to carry out such a capacity expansion safely and efficiently,” says the order of the joint director general of the DGCA, Maneesh Kumar.
In the nine-month period ended 31 December 2022, the company recorded a substantial loss of Rs.1,514 crore. As of December 31st his net worth was negative Rs 5,801 Crore.
However, the low-cost airline has categorically stated that it has no plans to file for bankruptcy.
“We want to clear up any speculation that may have arisen as a result of another airline’s application. The airline is firmly focused on its business and continues to be in active discussions with investors to raise funds,” the airline said.
SpiceJet is facing bankruptcy proceedings as Ireland-based aircraft rental company Aircastle Ltd has relocated the company’s main bank NCLT initiate bankruptcy proceedings against the airline.
Amid the bankruptcy, the airline has also announced that it has also used the $50 million the airline received from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash provisions to start the process of reviving its am Ground lying fleet has launched.
According to SpiceJet’s Chairman and CEO: Ajay SinghThere can be no talk of an application for insolvency at all.
“Any rumor in this regard is completely unfounded. We are firmly focused on reviving our grounded fleet and getting more and more aircraft airborne. Work has already begun on that front and the company is leveraging the $50 million in ECLGS funding and our own cash,” he said.
“We have a great relationship with all of our partners. Our landlords have supported us through thick and thin, and continue to do so, and we are grateful for their support and trust.”
SpiceJet had previously announced plans to revive 25 grounded aircraft to capitalize on and make the most of the upcoming peak travel season.
A two-member NCLT panel agreed to hear the lessor’s pleadings and issued a notice to the airline. The bank headed by the NCLT President Ramalingam Sudhakarinstructed SpiceJet to attend the hearing at the next appointment.
Aircastle claimed default and filed for bankruptcy proceedings against SpiceJet.
A SpiceJet spokesman commented that the announcement was routinely issued in connection with the Aircastle affair.
“On the Aircastle issue, the notice has been issued as usual. There was no negative judgment against SpiceJet. The court has recognized the fact that the parties are in settlement negotiations and that they can continue to pursue them,” the spokesman said.
SpiceJet’s financial challenges have drawn significant attention as the company’s auditor has repeatedly raised concerns about its ability to continue operations amid significant debt.
In the domestic market, SpiceJet currently holds a 6.9 percent share, confirming its position among the other airlines.
Last year, the DGCA warned the airline after noticing various irregularities in its service.
“The financial assessment conducted by the DGCA revealed that SpiceJet operates with cash and carry and suppliers/approved suppliers are not paid regularly, resulting in a shortage of spare parts and frequent use of the Minimum Equipment List (MEL)… SpiceJet derived from this.” It failed to set up a safe, efficient and reliable air service,” according to a 2022 order.
The aviation regulator had also imposed some restrictions on the airline. “In light of the results of various spot checks, inspections and the response to the show notice to maintain a safe and reliable air service, SpiceJet’s number of departures is hereby limited to 50% of the number of departures authorized during the summer flight schedule of eight weeks from the 27 July 2022. Any increase in the number of departures over 50% of the number of departures authorized in the 2022 summer timetable during this period will require the airline to demonstrate to the satisfaction of the DGCA that “It has sufficient technical support and financial resources to to carry out such a capacity expansion safely and efficiently,” says the order of the joint director general of the DGCA, Maneesh Kumar.
In the nine-month period ended 31 December 2022, the company recorded a substantial loss of Rs.1,514 crore. As of December 31st his net worth was negative Rs 5,801 Crore.
However, the low-cost airline has categorically stated that it has no plans to file for bankruptcy.
“We want to clear up any speculation that may have arisen as a result of another airline’s application. The airline is firmly focused on its business and continues to be in active discussions with investors to raise funds,” the airline said.
SpiceJet is facing bankruptcy proceedings as Ireland-based aircraft rental company Aircastle Ltd has relocated the company’s main bank NCLT initiate bankruptcy proceedings against the airline.
Amid the bankruptcy, the airline has also announced that it has also used the $50 million the airline received from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash provisions to start the process of reviving its am Ground lying fleet has launched.
According to SpiceJet’s Chairman and CEO: Ajay SinghThere can be no talk of an application for insolvency at all.
“Any rumor in this regard is completely unfounded. We are firmly focused on reviving our grounded fleet and getting more and more aircraft airborne. Work has already begun on that front and the company is leveraging the $50 million in ECLGS funding and our own cash,” he said.
“We have a great relationship with all of our partners. Our landlords have supported us through thick and thin, and continue to do so, and we are grateful for their support and trust.”
SpiceJet had previously announced plans to revive 25 grounded aircraft to capitalize on and make the most of the upcoming peak travel season.
A two-member NCLT panel agreed to hear the lessor’s pleadings and issued a notice to the airline. The bank headed by the NCLT President Ramalingam Sudhakarinstructed SpiceJet to attend the hearing at the next appointment.
Aircastle claimed default and filed for bankruptcy proceedings against SpiceJet.
A SpiceJet spokesman commented that the announcement was routinely issued in connection with the Aircastle affair.
“On the Aircastle issue, the notice has been issued as usual. There was no negative judgment against SpiceJet. The court has recognized the fact that the parties are in settlement negotiations and that they can continue to pursue them,” the spokesman said.
SpiceJet’s financial challenges have drawn significant attention as the company’s auditor has repeatedly raised concerns about its ability to continue operations amid significant debt.
In the domestic market, SpiceJet currently holds a 6.9 percent share, confirming its position among the other airlines.
