Troubled budget airline SpiceJet Ltd got a breather on Friday after Union aviationminister Ashok Gajapathi Rajuintervened and asked the state-owned vendors to go easy with the airline on getting assurance that things would improve at the airline in six weeks.
An industry source, who did not want to be named, said the minister's dictate to the public sector undertakings (PSUs) came after his meeting with SpiceJet's senior officials, who have given a commitment that they will improve the airline's financial condition within six weeks.
"The minister has asked the government agencies to go slow on SpiceJet and wait for another six weeks before taking any harsh action," he said.
SpiceJet's chief operating officer (COO) Sanjiv Kapoor confirmed the development to dna saying, "We are not on cash and carry with AAI."
He, however, refused to elaborate on it. "It (AAI's order to put Spicejet on cash and carry mode) has been withdrawn. No further comments," Kapoor responded to dna's sms.
However, problems of the airline were far from over. According to news agency PTI, in a major setback on Friday the Directorate General of Civil Aviation (DGCA) withdrew 186 of its slots and asked the airline it to clear salary dues of all its employees in the next ten days.
The agency said that after reviewing the situation facing the no-frills carrier, DGCA chief Prabhat Kumar took a series of decisions, including asking the airline to file a "convincing schedule" by December 15 to clear its over Rs 1,500 crore dues to various vendors including airports and oil companies, official sources said.
The DGCA also directed the airline not to take bookings of flights over one month and refund the booking amount to the customers of cancelled flights in 30 days.
As many as 93 arrival and 93 departure slots were withdrawn by directorate general of civil aviation as the low-cost carrier was operating 232 flights in October, instead of 339 in September.
The carrier has been grappling with operational issues due to crippling cash crunch, which has forced it to resort to large scale flight cancellations over the last few weeks. Dearth of working capital has also made it difficult for it to pay up its dues to vendors on time.
dna had reported on Thursday that Airports Authority of India (AAI) had put SpiceJet on cash and carry mode, implying that their credit facility had been revoked. This, normally, happens when an airline is unable to pay its dues in acceptable time, which is 30-45 days as per industry norms.
In a letter written to all the airports across the country, AAI executive director (finance) said: "It has been decided by the competent authority to put operation of SpiceJet Ltd on cash and carry basis."
An industry insider disclosed that the airline continued to be severely squeezed for cash and was unable to even pay salaries of some of its employees.
"For this month, it has paid salaries of only employees below assistant manager level, pilots and cabin crew till now. The rest have been told that their salaries will be paid by December 15," he said.
According to him, of the current 22 Boeing 737s with the airline, four were grounded but lessors were not able to take it back as they were not in flying condition.
"Despite the DGCA's clearance given to the lessors for the recovery of the aircraft, they are not able to take it back as parts are missing from them and so cannot be flown back," he said.
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