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SpiceJet – A case against bail out

Air India, Kingfisher and now Spice jet – these three are the companies that now define how bad domestic aviation business can be. But more than the aviation industry, these companies have proved how flawed India’s financial sector and regulators are. What else could be the reason for the huge bailouts to these companies that have regularly defaulted on their financial dues? While we are yet not over with Kingfisher fiasco, here is another candidate seeking a bail out – a loan worth Rs 6 bn. Among other dues such as to banks, staff and airport authorities, Spice Jet is not even able to afford the fuel to run the flight. That too, at a time when crude prices are crashing. Bailing it out will be ridiculous to say the least. That said, we will not be surprised if the company is entertained. After all, it is the Government itself pleading on its behalf. It was reported that Spice Jet was stripping parts off an aircraft to provide spares to other planes because of the cash crisis. We are sure even the passengers now are skeptical to travel by Spice Jet. We wonder what gives the Government so much of confidence on this firm that has reported losses in the bottomline in 13 out of 15 years of its operations. Not to mention the negative net worth and immediate and overall dues of Rs 14 bn and Rs 20 bn respectively. While the financials of this firm are in a

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