New Delhi: Revised Govt. Emergency Credit Line Guarantee Scheme (ECLGS) could throw a lifeline for airlines struggling SpiceJet. Sources in the budget airline claim that SpiceJet may get around Rs 1,000 crore under the revised plan, which will help it cover “all statutory dues, lessee payments and all-new Boeing 737MAX aircraft.”
A smaller fleet means greater efficiency- both in terms of operational and fuel savings. Cash-strapped SpiceJet has been unable to deposit TDS with officials for several months, PF to employees and is yet to file Form 16 for the last financial year.
“The additional funding of over $100 million in SpiceJet settles the debate on whether to survive forever. This will give impetus to the current fund-raising of $200 million being undertaken by the airline,” airline sources said.
SpiceJet CMD Ajay Singh said: “… (Revised ECLGS) will give a tremendous boost to airlines. I request the government to once again support the inclusion of Aviation Turbine Fuel (ATF) under GST, which is Will be a game changer for the whole region.”
The government on Tuesday revised the “Emergency Credit Line Guarantee Scheme” (ECLGS) to increase the maximum loan amount to 100% of their outstanding loans or Rs 1,500 crore, whichever is lower, subject to certain conditions, for a significant life. Throwing the line for struggling-to-survive Indian carriers. Devastated by Covid, airlines here have been battling record jet fuel prices for the past several months, which recently started cooling down. But now the rupee’s free-fall – with airlines being dollar-denominated for a major part of their expenses – is hurting them badly.
“… Ministry of Finance (on 4 October) revised the ECLGS to increase the maximum loan amount eligibility for airlines under ECLGS 3.0 so as to exceed the reference dates or Rs.1,500 crore, whichever is lower. (Of this) 500 crore will be considered, based on equity contribution by the owners…. The amendments are aimed at giving the necessary collateral-free liquidity at reasonable interest rates to tide over their current cash flow problems,” the finance ministry said in a statement on Wednesday. Told.
However, most airlines say there is a need for systemic changes, mainly related to jet fuel pricing. “ATF in India is the most expensive globally for domestic flights. Many states have reduced tax rates but people living in the biggest centers like Delhi and Mumbai have not done so yet. Our request to the Center for excise duty relief on jet fuel is pending for months,” said officials of several airlines.
They point out that the ability of financially weak Indian carriers to expand international networks remains limited and, as a result, foreign airlines account for most of the traffic in and out of the country. “It is not in anyone’s interest to have financially weak domestic airlines. Now that airlines and IndiGo have big players like Tata, a cost-friendly environment will enable them to grow faster and capture a greater share of international traffic for Indian carriers. Revising the ECLGS only means that highly leveraged airlines take on more debt and become even more vulnerable,” the officials said.
ATF prices began to rise after Russia’s war on Ukraine earlier this year, when air travel began after Omicron. As a result, there was no respite for the airlines ravaged by Kovid and now a weak rupee is adding to their woes.
While not yet accepting the demand of airlines for reduction in excise duty of ATF, the Finance Ministry in March 2022 had extended the ECLGS further. “Keeping in view the high proportion of non-fund based loans in the overall credit of the civil aviation sector, eligible borrowers were allowed to avail up to 50% of their highest total fund and non-fund based loan outstanding, subject to a maximum of Rs. .400 crore per borrower,” the last-minute statement added on Wednesday.
A smaller fleet means greater efficiency- both in terms of operational and fuel savings. Cash-strapped SpiceJet has been unable to deposit TDS with officials for several months, PF to employees and is yet to file Form 16 for the last financial year.
“The additional funding of over $100 million in SpiceJet settles the debate on whether to survive forever. This will give impetus to the current fund-raising of $200 million being undertaken by the airline,” airline sources said.
SpiceJet CMD Ajay Singh said: “… (Revised ECLGS) will give a tremendous boost to airlines. I request the government to once again support the inclusion of Aviation Turbine Fuel (ATF) under GST, which is Will be a game changer for the whole region.”
The government on Tuesday revised the “Emergency Credit Line Guarantee Scheme” (ECLGS) to increase the maximum loan amount to 100% of their outstanding loans or Rs 1,500 crore, whichever is lower, subject to certain conditions, for a significant life. Throwing the line for struggling-to-survive Indian carriers. Devastated by Covid, airlines here have been battling record jet fuel prices for the past several months, which recently started cooling down. But now the rupee’s free-fall – with airlines being dollar-denominated for a major part of their expenses – is hurting them badly.
“… Ministry of Finance (on 4 October) revised the ECLGS to increase the maximum loan amount eligibility for airlines under ECLGS 3.0 so as to exceed the reference dates or Rs.1,500 crore, whichever is lower. (Of this) 500 crore will be considered, based on equity contribution by the owners…. The amendments are aimed at giving the necessary collateral-free liquidity at reasonable interest rates to tide over their current cash flow problems,” the finance ministry said in a statement on Wednesday. Told.
However, most airlines say there is a need for systemic changes, mainly related to jet fuel pricing. “ATF in India is the most expensive globally for domestic flights. Many states have reduced tax rates but people living in the biggest centers like Delhi and Mumbai have not done so yet. Our request to the Center for excise duty relief on jet fuel is pending for months,” said officials of several airlines.
They point out that the ability of financially weak Indian carriers to expand international networks remains limited and, as a result, foreign airlines account for most of the traffic in and out of the country. “It is not in anyone’s interest to have financially weak domestic airlines. Now that airlines and IndiGo have big players like Tata, a cost-friendly environment will enable them to grow faster and capture a greater share of international traffic for Indian carriers. Revising the ECLGS only means that highly leveraged airlines take on more debt and become even more vulnerable,” the officials said.
ATF prices began to rise after Russia’s war on Ukraine earlier this year, when air travel began after Omicron. As a result, there was no respite for the airlines ravaged by Kovid and now a weak rupee is adding to their woes.
While not yet accepting the demand of airlines for reduction in excise duty of ATF, the Finance Ministry in March 2022 had extended the ECLGS further. “Keeping in view the high proportion of non-fund based loans in the overall credit of the civil aviation sector, eligible borrowers were allowed to avail up to 50% of their highest total fund and non-fund based loan outstanding, subject to a maximum of Rs. .400 crore per borrower,” the last-minute statement added on Wednesday.