737 Max's Grounding Was Bigger Disaster For Us Than Covid: SpiceJet CMD

The grounding of the entire Boeing 737 Max aircraft fleet by the Directorate General of Civil Aviation (DGCA) for over two years was a bigger disaster for SpiceJet than the impact of Covid-19, said Chairman and Managing Director Ajay Singh on Monday.

On March 13, 2019, all Max planes were grounded in India by the DGCA after two of them crashed abroad within a span of six months. This suspension was lifted on August 26, 2021, after Boeing made necessary rectifications in the aircraft.

During a session at CAPA India Aviation Summit 2023 on Monday, Singh said: “When the first plane crashed, we were told that it must be some pilot error. While that was still being investigated, there was the second crash. And then the Max fleet was grounded...This (grounding) was a bigger disaster than Covid-19 for us. We are still on the path of recovery as a consequence of that."

The first plane, operated by Indonesian carrier Lion Air, crashed on October 29, 2018, killing 180 people. The second one, operated by Ethiopian Airlines, crashed on March 10, 2019, killing 157 people. SpiceJet had placed an order for 155 Max planes in 2017, and at the time of grounding in March 2019, it had 12 of them in its fleet.

“When the fleet was grounded (in March 2019), we were told that it was a 15-day affair and that only a small certification and small fix was required and it would be done. Who could have imagined that this entire process would take two years or more? So, I think that is what really derailed SpiceJet at that point,” he added.

SpiceJet’s DNA is to never sit and pity itself, and it always wants to move forward, Singh mentioned. “It is the DNA of SpiceJet: We refuse to die,” he said.

He said the airline was focused on reducing debt, and people will see a vastly different balance sheet over the next few quarters. SpiceJet incurred net losses of Rs 316 crore, Rs 934 crore, Rs 998 crore, and Rs 1,725 crore in financial year 2018-19 (FY19), FY20, FY21, and FY22, respectively.

Singh said that after the Covid outbreak, SpiceJet was relatively weaker than other Indian carriers. “We chose not to shut down and die,” he added. When passenger flights were suspended during, the airline chose to carry cargo in its planes.

SpiceJet has been dealing with a shortage of funds, leading to delays in payment of dues to entities such as aircraft lessors. Last month, its board restructured dues of more than $100 million to Carlyle Aviation Partners by giving the aircraft lessor a 7.5 per cent stake in SpiceJet and compulsorily convertible debentures in its cargo subsidiary.

When asked whether more creditors could convert dues to equity in the airline, he replied: “We have done some of that. We are flexible about it. We will talk to our partners and we will see what they prefer to do. Irrespective, we need to deleverage our balance sheet to have the space to grow.”

For SpiceJet, there has always been tremendous support from its partners (lessors, etc) because the airline has always been as honest as possible about its situation, Singh said.

“In 2015, we owed people a huge amount of money. We paid everybody back in three years. We cleaned everything. Now, we find ourselves in a similar situation. We will make sure that all those who support us, we support them back,” he added.