SpiceJet aspires to grow amidst COVID-19 pandemic.

Ajay Singh, the SpiceJet co-founder, has a challenging task to make sure that the no-frills airline conserves cash. Even though he re-negotiates contracts the opportunities of recapitalization, its balance sheet have all possibilities to revive its revenue from the crisis caused by the COVID-19 pandemic.

Ajay Singh, the SpiceJet co-founder, has a challenging task to make sure that the no-frills airline conserves cash. Even though he renegotiated contracts for opportunities of recapitalization, its balance sheet has all possibilities to revive its revenue from the crisis caused by the COVID-19 pandemic.

Since the pandemic has acted as a doom over the aviation sector globally,  SpiceJet appears to be more burdened than any other airlines. The carrier’s statutory auditors, S.R Batliboi and Associates L1p, raised doubts about the company’s ability to continue as a going concern last month as the no-frills airline reported its highest ever quarterly loss during the March quarter at Rs807.07 crore.

“The delays in the delivery of Boeing 737 MAX planes has impacted SpiceJet’s profitability”, said Kapil Kaul, South Asia Chief Executive Officer of CAPA -centre for Aviation, an aviation consultancy firm.

For Indian no-frills carrier, SpiceJet recently inducted an Airbus A330 aicraft on wet lease (an arrangement through which the lessor operates the aircraft and also provides the crew) for medium and long-haul operation and an Airbus A340 for cargo operations.

Plan of SpiceJet to introduce widebody aircraft such Airbus A330 and A340 under wet lease could be viewed as unfocused if these were normal times, said a senior airline official. This was a clever move during these circumstances as it will allow in increment of cash generation.

“Overall demand, especially for international flights, has dropped significantly, but there is still more demand than supply in the market because of the much reduced direct flights and the inability of Middle Eastern or other connecting carriers to ferry passengers or take cargo directly from India to the West under air bubble arrangements”, said a senior airline official.

“Many wide body crafts and crew are idle because of pandemic and therefore SpiceJet has got good deal of wet lease, possibly paying just for the hours of utilization daily rather to pay fixed rent on monthly basis. But it will be too hurry to decide that these measures alone can survive the airline. What can we assume that these measures only can extend the flying capacity of airline despite adverse circumstances.

Approx $ 3.5 billion need to be raise to survive Indian airline from the pandemic, aviation consultancy firm CAPA India said in a report. However, SpiceJet was in urgent need of capital infusion even before the Coronavirus outbreak and the pandemic has only accentuated the liquidity crunch, Central Institutional Research said in a report on 31st July.

The key survival and the revival lies in the hands of capitalization but the decision of SpiceJet shows the determination of fighting and commitment to to survive.

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