SpiceJet Likely to Go Kingfisher Airlines' Way: Analysts
Budget carrier SpiceJet returned to normalcy on Thursday after days of chaos involving cancelled flights and a temporary grounding of its fleet on Wednesday. Its shares jumped more than 15 per cent on Friday on reports that former part-owner Ajay Singh is leading a Rs 1,200 crore bailout plan to rescue SpiceJet from collapsing.
The news of fresh investment in to SpiceJet might have enthused traders, but most analysts believe that SpiceJet will go the Kingfisher way.
"Airlines are cash guzzlers...when they have made profits, it's a few crores, but when they lose, its hundreds of crores. The way SpiceJet is going, it's a story similar to what we saw in 2011-12 for Kingfisher Airlines. It's a matter of time before SpiceJet goes under," said market analyst Ambareesh Baliga.
Most aviation industry experts say India's second biggest low-cost carrier may not recover. SpiceJet has not posted a profit in the last five quarters and needs urgent infusion of over Rs 2,000 crore to stay afloat. It has cut its fleet by about a third in September and daily flights have come down to 230 from 340. It owes money to oil companies, airports as well as its employees.
"Figuratively speaking it is not in a recoverable position. Absolutely not unless you get Rs 3,000-5,000 crore to start and then the branding has dropped so much that it's not going to get the passengers and the load," aviation expert and former Directorate General of Civil Aviation advisor Denzil Keelor told NDTV. (Watch: Video)
"I'm sorry but they have reached a stage of no return," he added.
According to Mr Keelor, banks are unlikely to lend to SpiceJet, a fact that the carrier's management has also highlighted recently.
"There is nobody in the banking system who wants to lend money to the promoters...The entire banking system is in mortal dread of the Indian aviation industry," SL Narayanan, Group CFO, Sun Group told NDTV on Wednesday. Billionaire media tycoon Kalanithi Maran's Sun group holds the controlling stake in SpiceJet.
Kapil Kaul, CEO South Asia, CAPA-Centre for Aviation told NDTV on Wednesday that events of the last few says have crippled the customer confidence and the government's reprieve may have come too late for the ailing carrier.
"To be honest with you I don't know what's going to happen in two weeks if the promoters don't come in. If the money doesn't come from promoters it will be a closed case," he said.
