In the latest setback for the airline, private lenders IDFC First Bank and Yes Bank, along with state-owned Indian Bank have reportedly put their loans to SpiceJet Ltd. in the 'high risk' category, people with knowledge of the matter informed Reuters.?
Lenders are concerned about SpiceJet's cash flows and have held discussions seeking assurances from the Indian budget carrier, as it is behind on payments to some aircraft lessors, sources told Reuters.
The last few weeks have been turbulent for the budget airline. In an unprecedented move, India's aviation regulator DGCA slashed SpiceJet's approved departures by 50% for a period of eight weeks after an audit revealed the airline's inability to establish "a safe, efficient and reliable" service.
While placing SpiceJet under "enhanced surveillance," the regulator stated in its notice there was "poor internal safety oversight" at the airline, and that financial issues at the carrier were leading to a "frequent shortage of spares."
However, in a stock exchange filing post stock market closure, SpiceJet called the report of its loans being put under the high risk category 'false and baseless,'?as per ET.
"None of our banks has put our account on high risk or alert. The same has been confirmed to us by our lenders. It is unfortunate that the story was run despite our strong denial and no official comment from any of our banks," the company clarified.
"Loans are being serviced as per the agreed terms. We are not aware of any bank having any 'concern' nor has there been any communication regarding the same to SpiceJet," a company spokesperson told Reuters in an email.
The chief of the Directorate General of Civil Aviation (DGCA), Arun Kumar, said SpiceJet will be permitted to reinstate its capacity but in a gradual manner and once it demonstrates it has fixed the manpower and spare part shortages.
"At this point in time we feel they can only operate 50% of their capacity without compromising safety," Kumar said, during an interview at the watchdog's headquarters in India's national capital New Delhi.
Kumar reportedly said a review of SpiceJet's operations and physical audit of the airline showed the carrier was "incapable" of flying at full capacity, the ET report mentioned.
"The decision is a pre-emptive step to ensure there is no safety issue in the future and does not mean the airline is not fit to fly. Our objective is not to disrupt service."
Reports also emerged that the airline's promoter Ajay Singh was in talks with a Middle Eastern carrier and an Indian conglomerate for a potential partial stake sale.
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