What the SpiceJet COO has to say on the mounting crisis

The amount SpiceJet owes its vendors is much lower than what has been reported in the media, according to the crisis-hit airline’s chief operating officer Sanjiv Kapoor.

He tells Business Standard (who met him before the board meeting on Monday) that the carrier will surmount the present crisis very soon.

Edited excerpts:

It was reported that SpiceJet’s pending dues to vendors, airports, and lessors exceed Rs 1,600 crore (Rs 16 billion). How does the airline propose to clear it?

This is a misconception. Our total payables to vendors is significantly less than that. Our dues have actually declined since June this year.

SpiceJet’s board is meeting today (Monday) to take stock of the situation. Are the promoters planning more infusion? The sense one gets is that the airline will collapse if infusion is not made urgently. . .

This is a routine update meeting.

I have no further comments at this point.

Even now there is a mismatch (of Rs 5-10 crore or Rs 50-100 million) between actual revenue earned daily and revenue that would be required to meet costs and pay pending dues. The restriction on bookings beyond 30 days will impact it further. What is the update on discussions with the Director General of Civil Aviation?

Without commenting on specific revenues, any closure of bookings 30 days and beyond will be counter-productive, as 30-35 per cent of our revenues comes from bookings beyond 30 days.

Reducing that at this stage is not helpful as it makes that much harder to meet expenses, and we will be discussing our concerns with the DGCA.

It is said the airline has been defaulting on loan principal and interest payments to Export Development Canada for the Bombardier Q400 planes, prompting the Canadian government to intervene in the matter. Similarly, payments to lessors and banks have been delayed and briefly the airline’s account was frozen by the lenders till dues were realised. . .

This rumour regarding Canadian intervention is false, and the civil aviation minister himself said today (Monday) that there was no truth in that. Other payments are privileged info, though we want to place on record that we have cleared all service taxes as well as TDS (tax deducted at source) for FY14.

According to a media report, SpiceJet has told the government an investor will be finalised in six weeks. Can you share an update?

I cannot comment on specifics. This is all speculation.

The airline is said to have requested airport operators on moratorium in payments. Is there an update on that?

We are in an inter-dependent industry and help each other in terms of need. We have a cooperative relationship with airports.

When we had the buffalo incident in Surat, many media asked if we would ask Airport Authority of India for damages, and we said ‘Of course not!’.

We are partners in Indian aviation, we don’t do things to hurt one another.

AAI and all airports have benefited significantly from the demand stimulation and year-over-year growth in passenger numbers catalysed by SpiceJet.

Even if the fare is low, airport fees remain the same and the increased passenger count benefits the airports significantly.

We are in a mutually dependent, symbiotic relationship.

Image: SpiceJet COO Sanjiv Kapoor.