SpiceJet Avoiding Fate as Kingfisher Airlines

The Parent company behind SpiceJet said on Wednesday, it could not manage to spend what could be large amount of money to save the infamous budget airline, increasing concerns over its future.

SpiceJet was offered a reprieve on Wednesday after the government requested suppliers to offer it more penses. But it was still compelled to ground its entire fleet on Wed after oil companies refused to refuel its aircraft.

Flights started again from 4 p.m

Loss-making Spice Jet is racing against time to avoid the same destiny as Kingfisher Airways, which ceased operations in 2012 and left Billions of rupees in overdue financial obligations.

That high-profile implosion was an embarrassment for India's aviation industry. Its creditors' lack of ability to get back cash has also driven a discussion over India's lack of guidelines to guide struggling organizations through liquidation or restructuring, forcing concerns that remain mostly uncertain.

Controlled by multi millionaire Kalanithi Maran, SpiceJet needs at least $300 million to secure and restore, company CAPA reviews, an amount its Parent says it does not have.

"We do not have the assets to get a great amount presently, which is why we need bank funding for which the marketers (main shareholders) are willing to offer a assurance," S.L. Narayanan, Chief Financial Officer of Sun Group, SpiceJet's Parent, told Reuters in an meeting.


       

"We cannot do more thanis."

Spice Jet owes about 6 billion dollar rupees ($94 million) to organizations such as the oil organizations and airport terminal regulators, Narayanan said. Its net debt was standing near to $230 thousand at the end of Sept.
                                             

The municipal aircraft ministry said on Wednesday that airport terminal suppliers & state oil organizations would be requested to offer the airline 15 days..

Two of SpiceJet's greatest energy suppliers, which together with other lenders are due nearly $100 thousand, said they are now fuelling SpiceJet aircraft, but under tight circumstances.

"We are fuelling to the level that they pay us," a BPCL (BPCL.NS) spokesperson said.

The municipal aircraft ministry also said banks or other banking organizations could be requested to offer up to 6 billion dollars rupees to SpiceJet, supported by the personal assurance of Maran.

The actions, the ministry said, were targeted at preventing a failure which it said would be a "major setback" for the municipal aircraft sector.

Shares in SpiceJet shut down 5.4 percent on Wed and have now lost a third of their value this month.