By Tommy Wilkes
NEW DELHI (Reuters) - The future of loss-making airline SpiceJet Ltd hung in the balance on Tuesday, as it awaited a government decision that could give it more time to pay suppliers and pull back from the brink of collapse.
In a crisis reminiscent of the high profile downfall of Kingfisher Airlines -- which left billions of rupees of debts and unpaid wages -- SpiceJet is battling costly refunds for customers, cancelled flights and a government-imposed ban on taking advance bookings for travel more than 30 days away.
Executives at the carrier had been scheduled for talks with government officials on Tuesday. A government verdict on a payment schedule is expected to follow the end of those negotiations, but there is no fixed deadline.
Regulators had demanded a payment plan from the low-cost carrier by Sunday -- a plan scheduling payments to airline authorities and fuel suppliers. It was unclear on Tuesday whether one had been submitted.
A spokesman for the airline declined to comment.
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Despite a large and increasingly affluent and mobile population, airlines in India have struggled to make a profit. Most make heavy losses as they struggle to raise fares above the operating costs in a highly competitive market.
SpiceJet, owned by billionaire media tycoon Kalanithi Maran, has been in the red since last year. It has already cut the size of its fleet by a third since September and cancelled more than 70 flights a day for the rest of this year.
A reclusive figure, however, Maran has been largely absent from talks and, since the start of its latest woes, has yet to make any public statement on the airline's future -- and on whether he could step in.
"If new money doesnt come from the promoter (Maran) then there is no case going forward," said Kapil Kaul, CEO for South Asia at consultancy CAPA.
Maran, who controls SpiceJet through his Sun Group, has put at least $400 million into the airline, Kaul estimates, but would need to invest $300 million to $350 million more to get it back on its feet.
SpiceJet shares, which fell as much as 17 percent earlier on Tuesday, ended up 2.6 percent on the day after local TV networks reported the government would remove a ban on advance sales.
India's civil aviation regulator this month banned SpiceJet from taking advanced bookings for trips more than 30 days away.
"Given the experience with Kingfisher, probably efforts would be made by government and stakeholders to make sure Spicejet doesn't go the Kingfisher way," said Deven Choksey, managing director of brokerage K.R. Choksey Securities.
Kingfisher Airlines, has not flown for more than two years.
($1 = 63.4300 rupees)
(Additional reporting by Abhishek Vishnoi; Editing by Sumeet Chatterjee and Clara Ferreira Marques)