Wednesday, November 27, 2019

With extremely low amounts of cash on books, SpiceJet faces liquidity crunch

The woes of the airline operators in India don’t appear to be going away. After Jet Airways and Air India, it is now being reported that SpiceJet could be in some sort of trouble too, if the company does not quickly raise some funds. The airline is running on a very thin cash-in-hand situation.
Based on the financial figures released for the quarter ending September 30, 2019, SpiceJet has just Rs 93 crore under ‘cash and cash equivalents’. Just to gain a perspective the figure for ‘cash and cash equivalents’ with InterGlobe Aviation, the company that runs IndiGo is Rs 18,736 crore.
In the first half of the fiscal, SpiceJet reported a loss of Rs 200 crore.
There have been media reports that SpiceJet has been in talks with investors to raise Rs 750 crore, but the SpiceJet management has denied there is any such move.
The risks associated with running low on cash reserves is that any unexpected spike in expenses can put the airline into difficulty. The outgo on account of aviation turbine fuel, for example, could shoot up suddenly.
Observers point out that the sudden closure of operations by Jet Airways should have benefitted an airline like SpiceJet, but on the face of it that does not appear to have been the case. The July-August quarter might have been poor due to the tapering off of demand due to various reasons.
27/11/19 S Mahadevan/News Minute

To Read the News in full at Source, Click the Headline


Post a Comment