Comments
Forum Gandhi
SpiceJet has made partial payments of dues towards the Airports Authority of India to avoid encashment of its bank guarantee. It has paid ₹4.31 crore as upfront cash, partial interest payment of ₹14 lakh, ₹20 crore TDS till December 2020.
The debt-strapped airline has also proposed to pay the rest TDS amount in two instalments before June 30 and requested waiver of interest dues.
According to a letter submitted by SpiceJet to AAI on April 1, the low-cost carrier said that it has paid ₹4.53 crore as on March 31, thus bringing the current outstanding principle amount of of ₹115.41 crore within 75 per cent of bank guarantees and 100 per cent of cash deposit towards total security cover of ₹153.63 crore complying with the settlement proposal.
AAI’s credit policy states that if the total dues of an airline are above 75 per cent of the bank guarantees provided by the airline, AAI can encash it. “We want to reiterate the recent increase in Covid infections across the country and world has again led to a loss of revenue, drop in passenger traffic, lower load factor and lower passenger travel sentiments beyond the control of SpiceJet akin to force majeure conditions,” the airline said. In its recent financial results announcement, SpiceJet’s auditors raised concerns for its survival.
Paying back the dues
In this regard, in a letter dated February 3, SpiceJet had requested for considering a waiver of interest for delayed payments during the period from March 2020 and March 2021.
As on March 30, 2021, the outstanding principal amount owed by SpiceJet is Rs 133.52 crores of principal amount however, “this also includes the TDS amount of Rs 18.58 crore which SpiceJet would be depositing soon,” it said.
As per Income Tax Act, SpiceJet is responsible to deduct Income Tax at specified rate and to deposit the tax amount with the Authority within a specified time period. Hence, SpiceJet would be depositing the TDS amount and the same has to be excluded from the principal amount.
Thus, the actual principal amount of ₹119.94 crore that SpiceJet owes the AAI has now reduced to ₹115.41 crore after making the recent payments, the airline said in the letter.
A copy of the letter was reviewed by BusinessLine.
The cash-strapped airline further said that it has already provided the TDS deposit certificate of ₹20.52 crore in December 2020. SpiceJet will further “deposit the TDS amount in two instalments: the first instalment of ₹5.30 crore By April 07 2021 and second instalment of ₹13.28 crore by June 30th 2021.”
Cash & Carry mode
Since June 2020, SpiceJet has been put on cash-and-carry mode to use the airport facility. This means that SpiceJet will have to pay daily in order to fly. “SpiceJet continues to make Daily payment of ₹1.51 crore under the cash and carry scheme,” it said.
This comes even as SpiceJet has signed a memorandum of understanding with Avenue Capital to Sell and Lease Back 50 aircraft. The airline has also bid for Air India, and is one of the short-listed entities to bid for the national airline.
Spicejet had sought a one-time debt restructuring and has also requested a ₹500 crore working capital in order to tide through the Covid-19 pandemic from private sector lender Yes Bank.
Now BusinessLine has learned that the proposal submitted to Yes Bank, too, is on a standstill.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.