Tuesday, August 09, 2022

SpiceJet loans placed in high-risk category by some banks

Private lenders IDFC First Bank and Yes Bank and state-owned Indian Bank have put their loans to SpiceJet Ltd in the high-risk category, the latest setback for the airline, people with knowledge of the matter said.

While the Indian budget carrier has not so far defaulted on any loans, the lenders are concerned about its cash flows and have held discussions to seek assurances from the airline as it is behind on payments to some aircraft lessors, the sources said.

"There is no positive news about SpiceJet", with earnings under pressure over several years due to the pandemic, one of the sources said. The airline's outlook does not look encouraging, the source added.

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

"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," a company spokesperson told Reuters in an email.

The banks did not respond to Reuters' requests seeking comment on SpiceJet's current loan size, concerns with its financial position, or whether it had asked for more funds.

"IDFC Bank's net exposure is quite small at only 460 million rupees and that is also supported by security cover of twice the amount," said a source familiar with the bank's exposure to SpiceJet.

SpiceJet last week said it had cleared all its outstanding principal dues with the Airports Authority of India, a move that would lead the airport operator to release a ₹50 crore ($6.3 million) bank guarantee.

Aircraft lessor TWC Aviation Capital however said SpiceJet remains behind in its payments on the two Boeing Co 737-800 planes it has placed with the airline.

"SpiceJet told us that they would catch up the payment in late August once they secure a loan from a bank," TWC Director Ted Nozaki told Reuters.

"At this time, we do not intend to request de-registering these aircraft, but the situation may change if they cannot catch up the payment, or their payment is further delayed," he said.

Several other lessors declined to comment.

08/08/22 Reuters/Business Line

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