SpiceJet Operates On Cash-and-Carry Basis At All Airports Due To Payment Delays: Report

The shares of the budget carrier SpiceJet Limited on Friday, June 7, closed the day at Rs 55.96, up by 1.52 per cent.

In a recent development, according to a report by CNBC TV18, SpiceJet Limited, is facing financial turbulence as it grapples with delayed payments to airports across the country.

The Airport Authority of India (AAI), as per CNBC TV18 report, responded to their queries that the airline is currently operating on a cash and carry basis for all its domestic flights amid the airlines dues to airport operators have exceeded the permissible limit against the bank guarantee or security deposits. The airline has a history of delayed payments to airports authorities.

What is cash-and-carry arrangement?

The cash-and-carry arrangement is where payments are collected in advance before aircraft departure.

The AAI has added that SpiceJet's inclusion in the cash-and-carry mode is a result of persistent defaults on payments, surpassing the threshold set against bank guarantees, reported CNBC TV18.

This raises concerns about the airline's ability to meet its financial obligations, particularly in a challenging market environment exacerbated by the COVID-19 pandemic.

The airline's ongoing fundraising efforts take on added significance, in the light of SpiceJet's financial challenges.

Earlier in December 2023, the budget carrier announced a fundraise of Rs 2,241 crores but only managed to secure Rs 1,060 crore.

Recently, on Wednesday, July 4, SpiceJet Chief Ajay Singh announced that the company will be raising around Rs 2,082 million in the next couple of months.

Prior to this, the airline raised Rs 1,249 crore (USD 150 million).

The delay in releasing SpiceJet's financial results for Q3, Q4, and FY24 further clouds the airline's financial outlook.

According to the CNBC TV18 report, SpiceJet stated that it is not operating on a cash-and-carry basis and mentioned that the airline has bank guarantees of Rs 40 crore deposited with the Airports Authority of India (AAI).