Flight leasing firm BBAM issues grounding notice to SpiceJet

Forum Gandhi Mumbai | Updated on April 11, 2021

San Francisco-based flight leasing company BBAM has issued a notice to SpiceJet for grounding seven aircraft because of non-payment of dues for over six months.

Two separate sources said that BBAM has sent the notice to the cash-strapped airline after multiple requests to pay back the lease rentals.

“This isn’t the first time SpiceJet has been served with a payment notice. The airline has, in fact, deferred lease payments for over six months now. The Directorate General of Civil Aviation (DGCA) has been given the grounding notices for the airline,” said a source.

BBAM did not respond to an e-mail query. A SpiceJet spokesperson said: “A few of their [BBAM’s] aircraft are already grounded due to scheduled expiry of the lease and these are normal return. We are working with BBAM for returning or retaining their remaining aircraft.”

BusinessLine had recently reported that Dubai-based lessor DAE, too, had sent a grounding notice for three aircraft.

Worsening financials

According to flightradar24, a fleet tracking website, SpiceJet has over 111 aircraft in its fleet.

The airline operates a fleet of Boeing 737s, Bombardier Q-400s & freighters; it also operates 63 daily flights under UDAN or the Regional Connectivity Scheme.

According to industry experts, the Gurugram-based airline needs to address its worsening financial health quickly to prevent a repeat of 2014, when it ceased operations temporarily.

SpiceJet reported a net loss of ₹57 crore for the quarter ended December 31, 2020 against a loss of ₹112.6 crore in Q2 FY21.

The auditors, Walker Chandiok & Co, LLP, in its report noted that: “Had the company not recognised such other income (including its related foreign exchange restatement), the reported loss for the quarter and the nine months period ended 31 December 2020 would have been higher by ₹150.97 crore and ₹447.05 crore, respectively.”

The auditors had also cast doubt about the carrier’s ability to continue as a ‘going concern’.

Published on April 11, 2021

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