SpiceJet won itself some additional liquidity as the Indian aviation regulator freed up a Rs500 million bank guarantee. Image Credit: AFP

Dubai: India’s SpiceJet has entered a ‘full and final’ settlement with the Airports Authority of India (AAI) and has cleared all outstanding principal dues of the airport operator. With this, SpiceJet will no longer remain on ‘cash and carry’ at AAI-run airports across the country and will revert to advance payment mechanism for daily flight operations.

“SpiceJet’s ability to clear the pending dues reflects the airline’s improved cashflow in recent times,” said the airline. AAI will release SpiceJet’s Rs500 million bank guarantee following the airline clearing all its principal dues. This will result in additional liquidity for the carrier.

The low-cost operator received a show cause notice from the country’s aviation regulator last month, while its aircraft suffered several mid-air lapses and has many in the industry concerned about its future. The airline, which came back from near bankruptcy in 2014, saw annual losses nearly triple to Rs10.29 billion in the last financial year compared to 2019.

SpiceJet, which recently settled a lawsuit over non-payment of dues to a Swiss MRO firm, was put in the ‘cash-and-carry’ category by many of its suppliers – this means the carrier can buy spare parts only on immediate payment. In May, SpiceJet delivered a load factor of around 89 per cent followed by Go First at 86.5 per cent, according to a DGCA’s report.

It also showed that Indian carriers flew 12 million passengers on domestic routes in May compared to just 2.1 million in the same period a year earlier.