The Delhi High Court on Wednesday asked SpiceJet Ltd to ground three engines by Friday and return them back to its lessors – Team France 01 SAS and Sunbird France 02 SAS – in 15 days. The HC asked the Ajay Singh-controlled carrier to make arrangements for inspection of these engines.
Last week, the Delhi HC reprimanded SpiceJet for repeatedly failing to pay the remaining amount owed to its lessors. The court instructed the airline to cease utilising the leased engines if it cannot fulfill its financial obligations to the lessors, emphasizing the need for compliance with agreements. During the past four hearings, SpiceJet had made assurances of payment which were not fulfilled, as noted by the court.
In the last hearing on August 8, the court inquired whether SpiceJet would be willing to provide a personal undertaking from its directors, stating that in the event the airline is unable to pay the outstanding sum to its engine lessors (Team France 01 SAS and Sunbird France 02 SAS), the executives will personally cover the costs.
The court also requested a response from the lessors regarding their acceptance of the directors’ undertaking or their intention to proceed with grounding the engines due to payment delinquency.
On its part, SpiceJet is currently facing legal action from its lessors for unpaid dues and has received requests to de-register their aircraft from the aviation regulator. Despite the growth in demand within India’s aviation market, other major airlines such as IndiGo and Air India have been able to add new jets to their fleet. However, SpiceJet has been experiencing difficulties in reintegrating their grounded aircraft due to legal and financial challenges, resulting in a decline in their market share.
In March 2024, SpiceJet had a cash and cash equivalents balance of Rs 187 crore, while experiencing a negative cash flow from operations of Rs 613 crore. To address this financial situation, the airline announced in late July its intention to raise around Rs 3,000 crore ($360 million) through the issuance of securities, including shares. Institutional investors will be offered shares in the company, though specific pricing details have not been revealed at this time. This fundraising initiative is aimed at stabilizing and fully restoring SpiceJet’s operations.
The airline had recently delayed June salaries for some employees due to urgent operational financial obligations.
The first-quarter profit of SpiceJet decreased due to a drop in the number of passengers flown, amidst ongoing legal and financial issues. The company’s profit for the quarter ending on June 30 was Rs 150 crore ($17.9 million), marking a 26.7% decrease from the previous year.
In April-June quarter, SpiceJet’s revenue decreased by 14.7% to Rs 1,708.24 crore from Rs 2,003.5 crore in Q1 FY24. This decline is attributed to the airline’s decision to scale back its operations. For the upcoming summer schedule of 2024, spanning from March 31 to October 26, SpiceJet plans to operate 26% fewer weekly flights.
SpiceJet said it has the highest passenger load factor among all airlines in the country.
“The airline continued to lead the industry with the highest domestic load factor of 91%, reinforcing its strong market position and operational excellence,” it said, adding, “We are pleased to report a profit of INR 150 Crore for Q1 FY 2024-25, which underscores our determination to navigate through uncertainties and is a testament to the hard work and dedication of our team.”
SOURCE – businesstoday.in / click to read at source
