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The Airports Authority of India (AAI) might stop all credit facilities to Jet Airways and SpiceJet, putting both in ‘cash-and-carry’ mode if they fail to clear unpaid dues, of a combined Rs 250 crore.
A meeting between the managements of Jet and SpiceJet with senior AAI officials is scheduled for Monday.
Both airlines have struggled to meet operational costs, with a sharp increase in those on fuel and in dollar-denominated expenses. Sources in AAI say SpiceJet has been inconsistent in clearing airport dues over the past six months, while Jet has not been making timely payments over the past year.
SpiceJet, however, ruled out the possibility of being put in ‘cash-and-carry’ mode as its dues were covered within the bank guarantee. “It is business as usual. Our outstanding is within the credit policy of AAI. We regularly meet AAI as part of our normal business,” said Sam Isaac, chief financial officer, SpiceJet. Isaac said the airline has never been put on ‘cash-and-carry’ by AAI. Jet Airways did not comment on the matter.
Jet and SpiceJet have reported record losses in the September quarter. Jet’s consolidated loss of Rs 998 crore in the July-September period was six times higher than the Rs 165 crore in net loss in the corresponding period last year and 28 per cent more than the loss of Rs 778 crore in the full financial year of 2012-13. While costs for the airline grew 17.8 per cent in the quarter on account of the twin impact of the rupee’s depreciation and rising fuel costs, low fares in the July-September quarter, usually a weak period for travel, led to subdued sales growth of one per cent.
Hurt by the depreciating rupee, higher maintenance costs and subdued demand, SpiceJet also had a record loss, of Rs 559 crore in the three months ending September. It had Rs 164 crore in loss in the corresponding period last year. The approximate impact of the currency depreciation was Rs 72 crore and aircraft maintenance cost was higher than expected at Rs 78 crore, the airline said. Revenue in the period declined 26 per cent to Rs 1,257 crore from Rs 1,702 crore in April-June.
In a recent report, the Centre for Asia Pacific Aviation (Capa) said, “Airlines continue to face the dual challenge of a hostile cost environment and soft yields.” Capa expects Indian airlines to post losses in excess of $500 million (Rs 3,000 crore) in the September quarter as compared to the $400-450 million projected earlier this year for the period.
