Spicejet is the second largest domestic airline after IndiGo, with a fleet size of 71. It operates 53 domestic and 9 international flights. On Tuesday, the Directorate General of Civil Aviation stated that SpiceJet has been removed from its enhanced surveillance regime. Earlier, the airline was placed under scrutiny and checks after finding out 8 flight accidents last year.
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HOW WAS SURVEILLANCE CARRIED OUT
Around 50% of aeroplane departures were cancelled in order to carry out spot checks and inspections. The statement by DGCA, made on Tuesday, gave an outlook on how and when the surveillance was conducted.
The surveillance including spot checks and inspections took place, generally during the night time. Frequent spot checks numbered around 51, across 11 locations in India, wherein, 23 aircraft were subjected to scrutiny and made nearly 95 operations.
REASONS FOR PUTTING SPICEJET INTO SURVEILLANCE
On July 11, The Directorate General of Civil Aviation put Spicejet under an “enhanced surveillance” regime. It was placed under the check after apparent discoveries of inadequate and improper maintenance, and concerns related to the flight accidents that occurred in the last year.
The aviation regulator had to ensure the safety of the passengers of the flight and the operating staff as well. Additionally, Spicejet faced failure in performing financial operations, as per the assessment carried out by DGCA, it was recorded that the airline was carrying out operations on cash and failed to pay the suppliers on a regular basis, which ultimately led to them facing a shortage of spare parts and pieces of equipment.
AFTERMATH OF SURVEILLANCE
An official made the statement that after running the examination and checks, suitable maintenance was carried out by the airline in accordance with the guidelines, findings were routine and not too concerning, so the Spicejet was no more a subject of the surveillance regime thereof.
FINANCIAL POSITION OF SPICEJET
On 31 December 2022, a significant loss of Rs 1514 Crore was recorded. As for the public response based on markets, it was rumoured that Spicejet might face bankruptcy and be considered insolvent. However, the chairman and managing Director of the airline, Ajay Singh, denied the rumours, regarding them as completely baseless, further proving clarity, that they have no plans of filing for insolvency.
Besides this, he stated that they will be putting the firm focus on reviving and continuing the grounded fleet of 25 planes, using the resource of $50 million, received from the Government’s emergency credit line guarantee scheme as well as the airline’s internal cash accruals.
Some financial challenges including the dispute between Ajay Singh and Kalanithi Maran, who owns SunTV and KAL Airways, have also put the financial performance of airlines into question.
STOCK PERFORMANCE AND PRICE SUMMARY
The stock has been gaining for the last 3 days. It has risen 13.86% in returns in the period. It opened with a gain of 4.96% today and touched an intraday high of Rs 42.3 which is around 4.96%. The stock has achieved a moving average higher than the 5-day moving average, but lower than the 20-day, 50-day, 100-day, and 200-day moving averages.
As for the action in the sector, Airlines have fallen by -3.12%. A fall in investor participation can be noticed, as on 24 July, the delivery volume of 4.59k has fallen by -87.65% against the 5-day average delivery volume. The FII saw a change of -0.02%
