SpiceJet aggressively push for restructuring its balance sheet; expanding its fleet
22 Mar 2023
22 Mar 2023
SpiceJet chief Ajay Singh said the airline is significantly restructuring its balance sheet and will aggressively push for fleet expansion. The airline will also be having a significant number of dedicated cargo aircraft, he said, adding that the cargo business has helped the airline pay off its liabilities.
Last month, the airline announced that Carlyle Aviation Partners will acquire a 7.5% stake in the airline by converting outstanding dues as well as snapping up shareholding in the cargo business. Besides, it is set to tap the Qualified Institutional Buyer (QIB) route to raise up to INR 2,500 crore.
ALSO READ - SpiceJet to de-merge cargo arm, convert Carlyle’s debt to 7.5% equity & raise funds via QIP
Amid the budget carrier facing multiple headwinds, he also said that a measure of desperation is always good for an organisation... we will emerge stronger".
SpiceJet aggressively push for restructuring its balance sheet; expanding its fleet
ALSO READ - SpiceJet Q3 net profit jumps 160%; shares fly high
"It is in our (SpiceJet) DNA. We just refuse to die," Singh said at a session at the CAPA India aviation summit here. 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 INR 316 crore, INR 934 crore, INR 998 crore, and INR 1,725 crore in the financial year 2018-19 (FY19), FY20, FY21, and FY22, respectively.
The airline is significantly restructuring the balance sheet and will be raising fresh capital. There will also be an aggressive push for fleet expansion, he asserted.
According to him, the grounding of Boeing 737 Max planes was a bigger disaster than Covid, Singh said. SpiceJet has been betting on more efficient Boeing 737 Max aircraft for its expansion. "As we grow again, you will find a lower cost base," he said.
The cash-strapped carrier has been facing multiple headwinds though it reported a multi-fold rise in net profit to INR 107 crore in the three months ended December 2022, helped by better performance in passenger and cargo businesses.
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 March 13, 2019, all Max planes were grounded in India by the DGCA after two of them crashed abroad within six months. This suspension was lifted on August 26, 2021, after Boeing made necessary rectifications in the aircraft.
“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. 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 were 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."
Ajay Singh, Chairman and Managing Director, SpiceJet
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.
The Secretary of the Ministry of Civil Aviation, Rajiv Bansal on Tuesday said that the construction of the Noida International Airport and Navi Mumbai Airports is on track and the two are likely to be inaugurated by next year. Speaking at CAPA India Aviation Summit, Bansal said that they are looking at a 500 million capacity at six metro airports taken together. "The six major metro airports in India that include Delhi, Mumbai, Bengaluru, Chennai, and Hyderabad together currently have a passenger handling capacity of 320 million," Bansal said. The civil aviation secretary also said that Delhi's terminal one (T1) expansion work will be completed by August- September this year. "We hope that terminal 1 will get expanded and the three terminals at Delhi airport collectively will have a capacity of handling of 100 million passengers per year," Bansal said. The fourth runway will get operational by August by which the air traffic movements correspondingly would increase, he said. He said that Air India's privatisation provides a level-playing field for other carriers and there is excellent scope for international connectivity growth, given India has a large diaspora of 30 million. "India is allowing Foreign Aircrew Temporary Authorization (FATA) pilots for 777s because there is demand but no skilled competency available," he said. In view of the huge demand for international and domestic travel, the challenge will be building world-class infrastructure, he added. He also said that there is a need for 19-seater aircraft exists in India now to connect tier 3 and 4 cities. He appreciated the UDAN scheme and called it unparalleled. He also said that Air India Engineering Services Ltd's (AIESL) investment plans are in the advanced stages.
Air India plans to use GPT4, the latest, enhanced version of the viral chatbot ChatGPT, its chief executive said on Monday, as the airline aims to improve customer experience on its website, reported The Economic Times.
Use of the generative artificial intelligence-based chatbot will not be “gimmicky”, but will actually enhance the airline’s functions, Campbell Wilson said at the CAPA India Aviation Summit. Wilson later told ET that the airline would use GPT4, which was launched by Microsoft-backed OpenAI last week.
A person close to the matter said the plan was to start with using the technology to power the FAQ (frequently asked question) section on the website. “Right now, the FAQ segments are inadequate and not informative. It should be able to answer all questions from baggage allowance to best fares to the most feasible flight timings. We are trying to get to that stage,” the person said. Going forward, the entire graphic user interface may be overhauled to be powered by GPT4.
According to The Economic Times report, chief digital and technology officer Satya Ramaswamy said that the airline was looking to implement generative AI to make sure that it was ahead of the curve. It is looking at using generative AI to summarise the pilot briefings, while also experimenting with other use cases, he said. "We do see the promise of generative AI primarily because as an airline, we are swamped with data and information," Ramaswamy said.
"Before pilots embark on one of their long-range journeys such as going from say Mumbai to San Francisco, which takes about 14-15 hours or so, they are given a briefing document which is about 150 pages long. And this is given a few hours before the flight departs. We are looking at using generative AI to summarise the pilot briefing to extract the most important elements and point it out to the pilots," he explained.
Air India is also working on building the ability for pilots to ask questions, Ramaswamy said. It could be details about the airspace closure en route or what is the alternative airport in the event of an emergency. It is looking at other use cases as well. One of these will be management-focused, wherein if the CEO wants to get the answers to the most pressing questions every day in the morning, he would be able to ask the generative AI system which will answer the questions.
The language model has been a rage in the way it can replicate human capabilities on a wide range of functions - from writing poetry to financial reports and even code. GPT4 has several enhanced capabilities, including “seeing”, describing and enhancing pictures. Already, many companies including American payment processing platform Stripe, financial services company Morgan Stanley and General Motors have said they would use ChatGPT.
Jaspreet Bindra, managing director and founder of Tech Whisperer Ltd UK, which does advisory and consulting work on digital transformation Air India, told ET that there were a lot of powerful AI use cases for aviation across aircraft design, predictive maintenance, supply chain optimisation, route planning and so on and in the generative AI space too there could be a few experiments that aviation companies could dabble in which include pilot training and customer service. However, he flagged concerns about the issues of “hallucination” that come with generative AI.
"Gen AI in aviation is at a very early stage and one should proceed with caution, especially because safety is paramount in aviation, and regulation is very strict," Bindra said. "Generative AI, even GPT4, is not factual, is prone to ‘hallucinating’, and is designed to be plausible rather than accurate. While GPT4 is better than ChatGPT/GPT3.5 on the above, it is nowhere near perfect. Therefore, one needs to be careful." Safety is critical in aviation and regulatory agencies such as the US Federal Aviation Administration must approve any new technology before it can be used in commercial aviation, Bindra said. "GenAI systems should be compatible with existing aviation systems, such as ATC, etc.”
Air India, under its new owners, Tata Sons, has been trying to reinvent itself in every aspect — product, operations and finance. Among other things, the airline has placed an order for 470 planes at a list price of over USD 70 billion. Wilson recently said the airline was in talks with Jaguar Land Rover for ideas on cabin design as it refurbishes its existing fleet and gets delivery of new aircraft. It is also overhauling its loyalty programme, revenue and fleet management functions and HR structure.
(With Inputs from The Economic Times)
Turkish airports have been banned from refuelling Boeing aircraft operated by Russian airlines. The ban, introduced by Turkey’s customs and trade ministry and also forbidding the provision of related services to the American-made aircraft.
On March 9, Turkish customs officials abruptly stopped permitting the transit of sanctioned goods bound for Russia through Turkish ports.
With Europe and the US running out of options for adding more sanctions to those already imposed on the Kremlin and sanctions ‘leakage’ a chronic problem, they have switched emphasis to more effectively enforcing the wide-ranging sanctions already applied.
Turkey Stops Servicing Russian-Operated Boeing Aircraft.
Turkey’s move against Russian airline-operated Boeings means that the carriers can still fly to and through Turkey, but they will have to deploy other aircraft such as Airbus jets.
However, US authorities want Turkey to stop receiving both Boeing and Airbus flights from Russian carriers, on the basis that Airbus planes contain many American parts.
Wrecking most flight links between Russia and Turkey would be a big win for the West, given that since Russia became a pariah to the West following its invasion of Ukraine 13 months ago Turkey—which has imposed no sanctions on Russia—has become an important bolthole for Russian investors, while its mega airport in Istanbul offers Russians connections to destinations the world over.
Also, Turkey has become an even bigger holiday attraction for millions of Russians than it already was given the limits the economic and political backlash against Russia has put on travel options.
Turkey has become an even bigger holiday attraction for millions of Russians.
US media reported that at the end of 2022 senior American officials warned that Turkish individuals were at risk of jail, fines, loss of export privileges and other measures if they provided services like refuelling and spare parts to US-made planes flying to and from Russia, and also Belarus, in violation of export controls imposed last year.
By the end of January, Russian and Belarusian airlines, including the Russian flagship carrier Aeroflot, had operated more than 2,100 flights using US-made Boeing jets to Turkey since October 1.
The flights included regular trips from Moscow to Turkish destinations including Istanbul, Izmir and the Mediterranean resort city of Antalya.
With inputs from bne.
Vietnam Airlines will operate daily flights between Vietnam and India again from March 26. Specifically, the SkyTeam alliance member will operate four flights a week on the Hanoi – Delhi route, departing on Mondays, Wednesdays, Fridays and Sundays, as well as three weekly flights on Ho Chi Minh City (HCMC) – Delhi, departing on Tuesdays, Thursdays and Saturdays.
The increase in flights will translate into 30% more capacity between Vietnam and India on Vietnam Airlines, compared to the current flight schedule, says the airline.
To celebrate the flight resumptions, Vietnam Airlines has launched special roundtrip economy class fares starting at VND7 million, or US$295, including taxes and fees when departing from Vietnam. Similarly, passengers flying from India to Vietnam on the new services will see reduced fares from INR23,950, or US$290, including taxes and fees.
Vietnam Airlines to recommence daily flights between Vietnam and India
Vietnam Airlines will compete on Indian routes with low-cost champion Vietjet Air. Re-capitalised Indian flag carrier Air India does not operate any flights to Vietnam at present.
ALSO READ - VietJet inaugurates 2 new routes to India
Vietnam Airlines will roster its Airbus A321 aircraft on both Hanoi-Delhi and HCMC-Delhi. These aircraft feature 16 business class recliner seats across a 2-2 configuration and 168 standard economy class seats in a 3-3 layout.
Flights depart Vietnam between 1800 and 1900 and arrive in the Indian capital around 2200 following flights that last approximately five hours. The returns leave Delhi before midnight and land back in Vietnam between 0600 and 0700 the following morning.
Vietnam Airlines officially launched the direct air route between Vietnam and India in June 2022. In the time ahead, it is set to open a new route to Mumbai, one of the largest economic, cultural, and social centers of the South Asian nation.
Tourism from India to Vietnam has been recovering robustly post-reopening. Last year, Vietnam received 137,000 Indian tourists, 82% of the number it welcomed pre-pandemic. About 200,000 Indians visited Vietnam in 2019. Destinations like Vietnam are fast gaining popularity among Indian families, thanks to better accessibility and connectivity with direct flights, as well as faster e-visa processing.
Cover Image - Sieu Viet
Lufthansa Group is rolling out a new airline in its lineup, City Airlines, which will combine the quality of Lufthansa and the experience of Lufthansa CityLine. All three airlines plan to work in close coordination, with the launch scheduled for mid-2023.
The brand-new website for City Airlines, the newest airline to join the Lufthansa Group, is already operational. The airline will begin operations in mid-2023 and fly to "important European cities and isolated regions," though an official opening date has not yet been announced.
According to Aviator, the regional carrier will use an Airbus fleet - likely A319s and is actively recruiting new employees. The "quality of Lufthansa" and the "experience of Lufthansa CityLine," another division of the Lufthansa Group, will apparently be combined by City Airlines.
Lufthansa set to launch a new airline "City Airlines" by mid-2023
City Airlines will, however, harness the "dynamism of a new young enterprise," according to the carrier's website. The carrier will operate short- to medium-haul routes (both international and domestic)
City Airlines GmbH was founded in Munich, which will act as the carrier’s hub, during the summer of 2022 according to the website. City Airlines will focus on short and medium-haul routes, expanding the European route network within the Lufthansa Group.
On the airline’s website, the Lufthansa Group writes: “We expand the European route network in the Lufthansa Group and bring you to your destination in our modern and economical Airbus fleet. Behind the company is a highly professional team in the cockpit and cabin, characterized as much by training by Lufthansa standards as by its great diversity.”
City Airlines is looking for a “highly professional team of colleagues” with various skills and backgrounds, who can “think outside the box”.
Lufthansa Group chief Carsten Spohr had signalled, early last year, that the company was intending to obtain a new air operator’s certificate for a “second CityLine”, which would probably have a similar-sized fleet. The company had planned the division to accommodate former Germanwings crews. Spohr had also pointed out that CityLine will not be permitted, under a union agreement, to operate aircraft with more than 75 seats from 2026, and that the new operation will offer an alternative.
Lufthansa had planned to hire former Germanwings pilots under contracts with lower wages compared to those offered by other airlines in the group. But the plan was met with opposition. It is worth noting that Germanwings ceased operations in 2020.
Lufthansa CityLine based in Munich Airport is a wholly owned subsidiary of Lufthansa and maintains hubs at Frankfurt Airport and Munich Airport, from where it operates a dense domestic and European network as a member of Lufthansa Regional.
ALSO READ - Lufthansa orders 22 new long-haul aircraft from Boeing & Airbus for USD 7.5 billion
Cover Image - Felix Gottwald