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Coronavirus blow: SpiceJet returns wet-lease aircraft; cash reserves burn for airlines as demand slumps

Prachi Gupta
SpiceJet chief, aviation sector, coronavirus outbreak, Ajay Singh, Hardeep Singh Puri, latest news on spicejet

Budget carrier SpiceJet has returned five wet-leased Boeing 737 aircraft to Turkey's Corendon Airlines as the aviation sector continues to remain under the firing line of the coronavirus outbreak. While the airline said that the return is a part of the airline's efforts to cut costs, sources hinted at financial crunch. "The suspension of international operations and the weakening of domestic demand due to COVID-19 outbreak earlier this month provided an opportunity to SpiceJet to cut high-cost expenses and focus our resources on running a lean and profitable operation. As part of the cost cutting exercise, wide-ranging measures have been taken including returning some wet-lease aircraft," a SpiceJet spokesperson said, The Indian Express reported. 

SpiceJet has ruled out cash crunch as a reason behind the return and said that due to reduced operations, the airline no longer needed the aircraft. Aviation is one of the worst hit sectors due to coronavirus as governments across the globe have imposed travel restrictions in the wake of coronavirus. India also recently announced the suspension of domestic and international flights to contain the virus. 

The situation is dire for the airline industry and according to an aviation consultancy firm, the impact is "so severe that even the stronger carriers may not be immune," CAPA said in a report recently. The losses to India's two listed carriers alone — IndiGo and SpiceJet — could be to the tune of $1.25-1.50 billion across Q4FY20 to Q1FY21, the report added. 

In the wake of burning cash reserves, airlines have also started to announce pay cuts and recently, GoAir also said that its employees will get lesser salaries for the month of March. India's largest carrier IndiGo also announced pay cuts for its top level management with CEO Ronojoy Dutta taking a 25% cut in his salary. 

The coronavirus outbreak has delivered a severe blow to several industries and aviation is one of the biggest sufferers, according to a FICCI report. The nation remains under a 21-day lockdown as the country races to contain the spread of the virus.