SpiceJet to Borrow INR 400 Cr to Revive 25 Grounded Aircraft Amid Go First Bankruptcy Report
Written by Sanjay Kumar
SpiceJet
Airline
- CEO: Ajay Singh (21 May 2015–)
- Founders: Ajay Singh, Bhupendra S. Kansagra
- Bag information: In economy, within India, 15kg free. To other destinations, 20kg free, additional allowance depending on route. More SpiceJet bag information
- Founded: 9 February 1984
- Headquarters: Gurugram
- Commenced operations: 23 May 2005; 17 years ago
On Wednesday, May 3rd, SpiceJet announced that it would use a combination of funds from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals to revive 25 non-operational airplanes.
“The airline has already mobilised around INR 400 crore towards getting its grounded fleet back in the air, which will further enhance its top-line,” SpiceJet said.
SpiceJet’s Chairman and managing director, Ajay Singh, said the airline is “meticulously working” towards resuming the service of its grounded fleet. The majority of the ECLGS funding received by the airline will be used for the same. This will help the airline capitalise and make the most of the upcoming peak travel season.
On May 2nd, Go First (formerly known as GoAir) filed for voluntary insolvency resolution proceedings before the National Company Law Tribunal. The low-cost airline temporarily halted operations on May 3rd, 4th, and 5th. Go First alleges that jet engine maker Pratt & Whitney is responsible for grounding half of its fleet.
In response, the US aerospace major said that Go First has a “lengthy history of missing its financial obligations.”
A source at Pratt & Whitney told news agency ANI that the budget airline has a history of missing its financial obligations.
Pratt & Whitney said it was “committed to the success of customers, and we continue to prioritize delivery schedules for all customers.”
The company also stated that it was complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, the company will not comment further.
On Tuesday, Go First Airlines announced that operations will remain cancelled due to the non-supply of engines by Pratt & Whitney.
In conclusion, SpiceJet is working towards reviving its grounded fleet with the help of the government’s Emergency Credit Line Guarantee Scheme and better cash accruals. Meanwhile, Go First has filed for voluntary insolvency resolution proceedings and temporarily halted operations. The dispute between Go First and jet engine maker Pratt & Whitney remains ongoing. These developments highlight the challenges faced by the aviation industry during the COVID-19 pandemic and the importance of financial stability in the airline industry.
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