New Delhi: After a brief hiatus, oil companies on Wednesday began supplying jet fuel to Spicejet after the troubled airline paid cash for the purchases.
The budget carrier is getting fuel as per the terms of ‘cash and carry’ agreement put in place about six months back.
“We never stopped supply fuel. We were supplying fuel to them as late as Tuesday late afternoon. They did not come to buy fuel after that and so we did not supply any. They came this afternoon and so we are supplying them,” a top executive at a state-owned oil firm said.
SpiceJet had been put on cash-and-carry about six months back, which meant fuel will be supplied to the aircraft only if they pay for it, they said.
The troubled Indian airline grounded its fleet earlier on Wednesday after suppliers refused to refuel its planes due to unpaid bills, company officials said. The no-frills airline, one of India’s leading carriers, has a fleet of 37. The action left thousands of angry passengers stranded at airports across the country.
SpiceJet used to buy about Rs55 million (Dh3.2 million) worth of fuel daily from Bharat Petroleum Corp Ltd (BPCL) but six months back it shifted some purchases to Hindustan Petroleum Corp Ltd (HPCL) and Reliance Industries.
The daily offtake had since then fallen due to grounding of several of its aircraft and SpiceJet cutting back its fleet.
The Civil Aviation Ministry had on Tuesday stated that the airport operators would be asked to give the airline 15 days to make payments, while state oil companies would be asked to give credit for up to 15 days.
SpiceJet has so far not cleared its stand on the issue of providing guarantees and it remains to be seen if the government will force oil firms to waive off the provision to help the airline get fuel.
The Civil Aviation Ministry on Tuesday said banks may be asked to lend as much as $94 million to keep the carrier in the air, backed by the personal guarantee of Indian billionaire Kalanithi Maran.
More than 50 per cent of SpiceJet is controlled by Maran, who heads the southern family-owned Sun media group.
SpiceJet approached the government on Monday, asking for emergency help to stay afloat. The ministry has already eased booking curbs imposed after the carrier cancelled flights and missed salary payments.
The carrier laid out a recovery plan two months ago that involved using fewer and newer planes.
Even with the fall in jet fuel prices, which represents over 40 per cent of an airline’s operating costs, the airline is still facing a cash crunch.
India has a congested airline market where fare competition is fierce and operating costs are high. All but one of its big four carriers are operating in the red.
There is speculation SpiceJet could end up being permanently grounded like Indian tycoon Vijay Mallya’s Kingfisher Airlines, which stopped flying in 2012 after running up huge debts.
SpiceJet shares were down 5.04 per cent at Rs13.20 Wednesday afternoon.
