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SpiceJet enters into full and final settlement with AAI; claims it is out of ‘cash and carry’ arrangement


SpiceJet_PTI1

SpiceJet on Tuesday said that it has entered into 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 an advance payment mechanism for daily flight operations. 

"SpiceJet’s ability to clear the pending dues reflects the airline’s improved cash flow in the recent times," said the airline in a statement. 

It said that the AAI will release SpiceJet’s Rs 50 crore bank guarantee following the airline clearing all its principal dues. This will result in additional liquidity for the airline.

This settlement with the AAI comes after aviation regulator Directorate General of Civil Aviation (DGCA) had last month raised concern about the ability of the airline to maintain its aircraft. In a show cause notice issued on July 6 to Spicejet which was involved in multiple technical malfunction incidents, DGCA had observed, "Financial assessment carried out by DGCA in September 2021 has also revealed that the airline is operating on 'cash and carry' (model) and  suppliers/approved vendors are not being paid on a regular basis leading to a shortage of spares and frequent invoking of MELs (minimum equipment lists)."

Following this, the DGCA last week restricted SpiceJet's flights to 50 per cent of departures approved under the summer schedule. This step did not have any impact on the operations of the airline as it is operating around 300 flights per day that translate to roughly 50 per cent of its filed 4,192 flights/week for the summer schedule.

(THE NEW INDIAN EXPRESS)