In June this year, the SpiceJet management decided not to renew its
contract with consultant Bain & Company. It was probably the first
sensible decision it had taken in some time. Bain & Company had been
advising SpiceJet — for a rather hefty sum— on routes to fly. However,
whether it was because it ignored the advice or because the advice
itself was bad, the fortunes of the airline were only taking a turn for
the worse. SpiceJet recently declared its highest-ever loss of Rs 1,003
crore for the fiscal 2013-14. In the past few quarters, the airline
which was profitable not so long ago has been consistently making
losses. At its last audit, the accountants raised the red flag and
questioned the airline’s ability to remain a “going concern”.
Since January this year, aviation industry sources say the airline has been scrambling for cash to meet operating expenses. Lease payments have been delayed, the Airports Authority of India (AAI) has put it on cash and carry at least once, vendors have been complaining of late payments and it is calling agents and on time travel portals (OTP) to advance cash to it. TDS has been cut from employees’ salaries but not paid to the government. The airline has also been trying desperately to attract a foreign investor ever since the UPA-II government eased foreign investment guidelines in the sector but to no avail. According to Kapil Kaul, chief executive officer, South Asia, CAPA, SpiceJet needs an immediate infusion of $200 million to stay afloat. Although the airline has been claiming that it is very close to announcing a deal (with an investor), till date there has been no announcement.
Read news in full 08/08/14 Anjuli Bhargava/Business World
Since January this year, aviation industry sources say the airline has been scrambling for cash to meet operating expenses. Lease payments have been delayed, the Airports Authority of India (AAI) has put it on cash and carry at least once, vendors have been complaining of late payments and it is calling agents and on time travel portals (OTP) to advance cash to it. TDS has been cut from employees’ salaries but not paid to the government. The airline has also been trying desperately to attract a foreign investor ever since the UPA-II government eased foreign investment guidelines in the sector but to no avail. According to Kapil Kaul, chief executive officer, South Asia, CAPA, SpiceJet needs an immediate infusion of $200 million to stay afloat. Although the airline has been claiming that it is very close to announcing a deal (with an investor), till date there has been no announcement.
Read news in full 08/08/14 Anjuli Bhargava/Business World
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