SpiceJet grounded as parent says can't afford rescue

By Tommy Wilkes

NEW DELHI (Reuters) - The parent of SpiceJet Ltd said it can't afford to bail out the cash-strapped budget carrier that was forced to ground its entire fleet on Wednesday after creditor oil firms refused to refuel the aircraft.

The loss-making airline, majority-owned by billionaire media tycoon Kalanithi Maran's Sun Group, has a fleet of around 22 Boeing Co planes but owes nearly $100 million to a raft of creditors including state-owned oil companies. This week it asked the Indian government for help to keep its aircraft in the air.

"We do not have the liquidity to invest large sums at the time which is why we need bank financing. For which the promoters are willing to provide a guarantee, S.L. Narayanan, Chief Financial Officer of Sun Group, told Reuters in an interview. "We cannot do more than this."

SpiceJet owes about 6 billion rupees ($94 million) to service providers such as the oil companies and airport authorities, Narayanan said.

SpiceJet on Tuesday appeared to secure a reprieve from a government keen to avoid the collapse of a second Indian airline in as many years. Kingfisher Airlines has not flown since 2012, leaving billions of rupees of debt and unpaid wages.

The civil aviation ministry said on Tuesday airport operators would be asked to give the airline 15 days to make payments, while state oil companies would be ask to give credit for up to 15 days.

The oil companies could not immediately be reached for comment on whether they were willing to grant that credit.

"Looks like the oil marketing companies have disregarded directions...We are grounded totally," Narayanan said.

The civil aviation ministry also said on Tuesday banks or other financial institutions could also be asked to lend up to 6 billion rupees to SpiceJet, backed by the personal guarantee of Maran. The measures, the ministry said, were aimed at avoiding a collapse which it said would be a "major setback" for the civil aviation sector.

Maran has invested about $400 million into SpiceJet, airline consultancy CAPA estimates, but would need to invest at least another $300 million to stabilise the airline and allow it to recover.

(Reporting by Tommy Wilkes; Editing by Sumeet Chatterjee and Kenneth Maxwell)