Amid Go First Bankruptcy, SpiceJet Plans To Revive 25 Grounded Aircraft; To Borrow Rs 400 Crore

SpiceJet said Rs 400 crore for the revival of its aircraft will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals, shares rallied over 5 per cent

Budget carrier SpiceJet has announced a revival-plan for its 25 grounded aircraft amid the Go First bankruptcy case. In a press release, the airline said that Rs 400 crore for the revival of its aircraft will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals.

Ajay Singh, chairman and managing director (CMD), SpiceJet, said, "We are meticulously working towards return to service of our grounded fleet back in the air soon. Majority of the ECLGS funding received by the airline would be utilised for the same, which will help us capitalise and make the most of the upcoming peak travel season."

This comes after the Directorate General of Civil Aviation (DGCA) in July 2022 restricted SpiceJet's flights to 50 per cent of departures approved under the summer schedule. The DGCA had said at the time that SpiceJet, on a number of occasions, either turned back to its originating station or continued landing to the destination with degraded safety margins.

The aviation regulator also noted that there had been poor internal safety oversight and inadequate maintenance actions that had resulted in the degradation of the safety margins.

From January 2022 to February 2023, SpiceJet had wrongly denied boarding to 3,377 passengers, the highest among all airlines in India. The airline has paid Rs 64.66 lakh as compensation to affected passengers in the same period. Experts had said that the large number of denied booking was on account of overbooking by the airline.

After this announcement, shares of SpiceJet rallied over 5 per cent in the early hours of trading.  

Meanwhile, Go First airlines, owned by Wadia Group, on Tuesday said that it was suspending all its flights for three days, May 3,4, 5, in view of a severe fund crisis. The sudden decision by the Mumbai-based low-cost airline, earlier known as Go Air, has left both passengers who had booked tickets as well as crew members in lurch. The development marks the collapse of another airline in India after the failure of Jet Airways. Jet Airways has been grounded since 2019 becasue of financial issues.

"Due to operational reasons, GoFirst flights for May 3, 4, 5, 2023 have been cancelled. We sincerely apologise to our loyal customers. We assure that we'll be back with more information soon," Go First said in a statement. The airline operates around 180-185 flights daily.