A SpiceJet Ltd. aircraft flies over a bus as it prepares to land at Chhatrapati Shivaji International Airport in Mumbai
India’s government gave billionaire Kalanithi Maran’s troubled airline SpiceJet Ltd. a lifeline by allowing it to take bookings until the end of March and extending a credit line for jet fuel by two weeks, an official at the civil aviation ministry said yesterday. The shares climbed.
SpiceJet has sought 10 days from the government to submit a funding plan, the official said, asking not to be identified citing rules. The New Delhi-based carrier earlier this month had been barred from accepting bookings beyond a month.
Allowing the airline to sell tickets for journeys through March may help bring in cash as it struggles to meet expenses. The company sought state relief Monday. A government official yesterday said it is working to find a solution to the crisis, though it is difficult to offer help to individual airlines.
SpiceJet’s shares finished 2.6 percent higher yesterday in Mumbai. During the session, they had climbed as much as 8.9 percent when the government decision to allow extended ticket sales was announced. They also dropped as much as 17 percent.
SpiceJet hasn’t submitted a concrete revival program, Junior Civil Aviation Minister Mahesh Sharma said yesterday. The relief the government has offered the carrier so far has been taken in the wider interest of passengers, he said.
Base fares sometimes as low as 2 U.S. cents have stoked more than $10 billion in aviation losses in the last seven years in India, one of the world’s costliest airline markets. Kingfisher Airlines Ltd., started by liquor baron Vijay Mallya, was grounded in 2012 after accumulating $1.4 billion of debt.
“Without significant and immediate promoter funding, I see no future,” CAPA Centre for Aviation’s South Asia Chief Executive Officer Kapil Kaul said in an e-mail about SpiceJet. “Two airline closures in the last few years and a very challenged SpiceJet highlight the massive structural challenges faced by the industry.”
A financial proposal the carrier submitted to the government in a meeting yesterday didn’t provide new information regarding new investors or funds, an official at the Directorate General of Civil Aviation told reporters in New Delhi, asking not to be identified citing departmental rules.
The government may give the company two to four weeks to pay outstanding jet fuel bills, the official said. Anurag Kotoky and Anand Krishnamoorthy, Bloomberg
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