In a big relief to SpiceJet, aviation regulator DGCA on Tuesday removed the low-cost carrier from its enhanced surveillance regime after the airline addressed deficiencies and secured funds to meet its obligations.
The airline had been under additional scrutiny due to financial issues and flight cancellations.
“In light of the past record and the special audit carried out in August 2024, SpiceJet has once again been placed under enhanced surveillance with immediate effect,” the Directorate General of Civil Aviation (DGCA) said in a statement.
Reports, however, claimed the regulatory body will continue random spot checks for safety.
The DGCA had conducted 266 spot checks confirming corrections. Recently, SpiceJet raised Rs 3,000 crore, cleared debts, and improved financial stability.
On August 29, the DGCA placed SpiceJet under enhanced surveillance due to concerns over flight cancellations and the airline’s financial difficulties. Following a special audit conducted on August 7 and 8, the regulatory body identified several deficiencies in the airline’s engineering facilities.
According to reports, SpiceJet has defaulted on payments to various vendors, leading some to file petitions for the airline’s bankruptcy.
Recent financial reports indicate a concerning trend for SpiceJet. The airline recorded a 20% decline in consolidated net profit, reporting Rs 158 crore for the first quarter ending June 2024, compared to Rs 198 crore same time, last year.
Additionally, revenue from operations dropped by 15% year-on-year to Rs 1,708 crore, down from ₹2,003 crore in the previous year.
“The DGCA’s commitment to ongoing random checks underscores the importance of maintaining safety standards as the airline works to recover,” an official of DGCA said.
“SpiceJet raised Rs 3,000 crore from institutional investors, enabling it to settle outstanding dues and salary payments, and finalize agreements with aircraft lessors, leading to a positive market response with its shares rising 1.66% to Rs 66.80 at the BSE,” he said.
The turnaround of events may provide a glimmer of hope to the airline but its financial stability in the long run will be closely watched.