SpiceJet on cash-and-carry mode at all airports: AAI
The AAI does not immediately jump to cash-and-carry; it holds several discussions with the company to clear payments. Only when the defaults exceed a certain amount of the bank guarantee does the AAI initiate cash-and-carry mode.
The Airports Authority of India (AAI) has told CNBC-TV18 that SpiceJet is operating on cash-and-carry mode at all its airports in India. An airport operator puts an airline on cash-and-carry mode after its dues exceed the limit granted by the airport operator against the bank guarantee or security deposits.
"As on date, M/s SpiceJet Ltd. is operating on Cash & Carry mode for its all lndia traffic operations," the AAI said, responding to a CNBC-TV18 query on June 5.
The public airport operator added that there have been a number of instances in the past where SpiceJet has delayed making regular payments.
Airlines have to pay the airports for using services like landing and parking.
The AAI explained in its response to CNBC-TV18 on June 7 that a cash-and-carry arrangement is a system of collecting payment in advance at the airport or corporate headquarters level before the aircraft departure.
It is up to the airlines to deposit payment in advance either before the departure of each flight or make advance payment to cover more than a day's operations.
This is SpiceJet's case, where it has to pay in advance for using airport services.
Healthy Airlines gets a 15-day credit facility to pay the AAI and they clear their payments every fortnight. Airlines have to deposit a certain amount as bank guarantee or security deposit with the Airport Authority.
The AAI does not immediately jump to cash-and-carry; it holds several discussions with the company to clear payments. Only when the defaults exceed a certain amount of the bank guarantee does the AAI initiate cash-and-carry mode.
The AAI in its response also added that they have sufficient bank guarantee from SpiceJet even when the airline is on cash-and-carry mode.
"As on date, AAI is having sufficient Bank Guarantee / Security Deposit," the AAI said.
However, SpiceJet said it is not on a cash-and-carry basis adding that the airline has bank guarantees worth ₹40 crore deposited with AAI.
Not being able to make payments on time is an indicator of a severe liquidity crunch for the airline.
SpiceJet is yet to release its Q3, Q4 and FY24 results.
The airline has been able to raise ₹1,060 crores of the ₹2,241 crores of the fundraise it announced in December 2023.
"As on date, M/s SpiceJet Ltd. is operating on Cash & Carry mode for its all lndia traffic operations," the AAI said, responding to a CNBC-TV18 query on June 5.
The public airport operator added that there have been a number of instances in the past where SpiceJet has delayed making regular payments.
Airlines have to pay the airports for using services like landing and parking.
The AAI explained in its response to CNBC-TV18 on June 7 that a cash-and-carry arrangement is a system of collecting payment in advance at the airport or corporate headquarters level before the aircraft departure.
It is up to the airlines to deposit payment in advance either before the departure of each flight or make advance payment to cover more than a day's operations.
This is SpiceJet's case, where it has to pay in advance for using airport services.
Healthy Airlines gets a 15-day credit facility to pay the AAI and they clear their payments every fortnight. Airlines have to deposit a certain amount as bank guarantee or security deposit with the Airport Authority.
The AAI does not immediately jump to cash-and-carry; it holds several discussions with the company to clear payments. Only when the defaults exceed a certain amount of the bank guarantee does the AAI initiate cash-and-carry mode.
The AAI in its response also added that they have sufficient bank guarantee from SpiceJet even when the airline is on cash-and-carry mode.
"As on date, AAI is having sufficient Bank Guarantee / Security Deposit," the AAI said.
However, SpiceJet said it is not on a cash-and-carry basis adding that the airline has bank guarantees worth ₹40 crore deposited with AAI.
Not being able to make payments on time is an indicator of a severe liquidity crunch for the airline.
SpiceJet is yet to release its Q3, Q4 and FY24 results.
The airline has been able to raise ₹1,060 crores of the ₹2,241 crores of the fundraise it announced in December 2023.
(Edited by : Ajay Vaishnav)
First Published: Jun 7, 2024 4:00 PM IST
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