Airlines face credit fears

As airlines try to counter soaring aviation turbine fuel (ATF) prices, slowdown in demand and overcapacity, the spectre of credit crisis is hovering over them. Run-up to Budget 2008-09
Airlines fear that if losses due to these factors continue, they might fall out of favour with banks and financial institutions.
Budget carrier SpiceJet Ltd chief financial officer (CFO) Parth Sarathi Basu says that even though his airline enjoys (credit) limits from banks today, it may not be the same next year if the red ink on the balance-sheet spreads further.
Basu revealed that SpiceJet did not have any plans for raising funds. A year back, the no-frill airline raised around Rs 320 crore ($80 million) from Tata Group, private equity funds Texas Pacific Group Ventures, Istithmar PJSC and Goldman Sachs.
And it is not just SpiceJet, which is sacrificing depreciation to fund its aircraft purchase. Credit crunch has forced other airlines also to go in for sale and leaseback and capacity rationalisation.
Industry sources say shortage of funds has compelled the Mallya-owned Deccan to defer delivery of some aircraft and GoAir to rationalise its fleet.
25/02/08 Praveena Sharma/DNA MONEY/Sify

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Categories: Indian Aviation- In General Feb 2008