CHENNAI: In a surprise turnaround for the Kalanidhi Maran-promoted airline, the Ministry of Civil Aviation threw them a lifeline to ensure they don’t go under just yet. After a topsy-turvy day that saw most of SpiceJet’s fleet grounded and their officer bombarded with angry passengers,
Civil Aviation Minister Ashok Gajapati Raju approved a few conditions that loosened the noose. Sources in the DGCA said that this decision may have been made to avoid a fall-out for the aviation sector, along the lines of what happened when Kingfisher shut down.
The provisions approved dealt with outstanding dues, the booking ban and most importantly a source of funds. But the funds come with a specific rider attached - Indian banks and financial institutions have been requested to give a working capital loan up to `600 crore “backed by a personal guarantee from the Chairman”. This effectively means that the media baron Kalanidhi Maran will have to step up yet again if SpiceJet is to have any hope of fund infusion in the near future. Maran, who owns a 53 per cent stake in the airline has already pumped an excess of `275 crore into the airline this year, but it has paled in contrast to the mounting debt burden of `1,800 crore.
But the working loan isn’t for an indefinite period. The MoCA has specified that the loan must be repaid within eight weeks flat - the period given to the airline to come up with a long term investment plan and show that they can raise ‘appropriate capital’. ”They had given a detailed plan about how they would restructure and come back strongly and while it is optimistic, it is in the interest of the people that such a decision may have been taken,” said a senior DGCA official.
In another decision, the Ministry of Finance has been asked to allow the airline to permit External Capital Borrowing (ECB) to ensure that they have some working capital till a loan comes along or a better deal is brokered.