SpiceJet, a domestic airline, anticipates receiving an additional Rs 1,000 crore under the revised Emergency Credit Line Guarantee Scheme (ECLGS).
Following the news, early trading in SpiceJet shares increased by more than 9%. At 9:33 am, the aviation stock was trading on BSE at Rs 40.75, up 6% from the previous close.
By clearing statutory obligations and lessor payments, bringing on new MAX aircraft, and operating a younger fleet, SpiceJet will be able to operate more efficiently and generate cash flow.
The budget carrier’s financial load and past-due obligations would be greatly reduced by the increased support provided by ECLGS.
Ajay Singh, the chairman and managing director SpiceJet, commended Nirmala Sitharaman, the minister of finance, and Jyotiraditya M. Scindia, the minister of civil aviation, for their recent decision to raise the ECLGS limit for the “struggling” airline industry. “This will give airlines a big boost,” he said.
The aviation and finance ministries’ haste and seriousness in addressing the issues and difficulties faced by airlines following COVID-19 and as a result of the record-high oil prices, he said, was nothing short of amazing.
The inclusion of aviation turbine fuel under the goods and services tax (GST), which would fundamentally alter the industry, was another suggestion Singh made to the government.
An airline would be qualified for "100% of their fund-based or non-fund-based loan due as on the reference dates or Rs 1,500 crore, whichever is lower; and of the aforesaid, Rs 500 crore shall be considered, based on equity contribution by the owners."
It stated that as of August 30, 2022, all other requirements, terms, and circumstances established under the ECLGS operational guidelines would be applied.
The changes made are intended to provide the necessary collateral-free financing at affordable interest rates to help them get through their current cash flow issues.
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