IDFC, YES Bank, Indian Bank Put SpiceJet Loans On High-Risk Category: Report

SpiceJet’s approved fleet was recently halved for eight weeks this summer by aviation regulator DGCA due to technical snags and lessors have filed formal applications to de-register four planes

SpiceJet Chairman Ajay Singh and his wife, who control 59 per cent of the airline, as of June 30 had pledged shares representing a 26 per cent stake, mostly to these three lenders for credit facilities for company use.

Source : Getty

In an another setback to SpiceJet, private lenders IDFC First Bank and Yes Bank and state-run Indian Bank have put their loans to the airline in the high-risk category, citing sources with the knowledge of the matter Reuters reported on Monday.

Quoting sources, Reuters said that the banks are concerned about SpiceJet’s cash flows and have held talks seeking assurances from the private carrier as it is behind on payments to some aircraft lessors.

The discussion comes as SpiceJet’s approved fleet was recently halved for eight weeks this summer by aviation regulator DGCA due to technical snags and as lessors have filed formal applications to de-register four planes.

These two developments have raised serious concerns the airline’s tight liquidity could be further strapped amid high fuel prices and rising competition from new entrants like Akasa Air.

One of the sources said “there is no positive news about SpiceJet” after earnings had been under pressure for several years due to the pandemic, while the airline’s outlook also does not look encouraging.

However, SpiceJet said that no bank has put its account on high alert.

A spokesperson of SpiceJet told Reuters, “Loans are being serviced as per the agreed terms. We are not aware of any bank having any 'concern' nor has there been any communication regarding the same to SpiceJet.”

The banks did not respond to Reuters’ requests seeking comment on the current loan size, concerns with SpiceJet’s financial position and if it had asked for more funds.

According to regulatory filing, SpiceJet Chairman Ajay Singh and his wife, who control 59 per cent of the airline, as of June 30 had pledged shares representing a 26 per cent stake, mostly to these three lenders for credit facilities for company use.

Shares of SpiceJet dropped as much as 4.8 per cent on the news. On Monday, shares closed 3.94 per cent down at Rs 47.50 on the BSE.