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MUMBAI — Three Indian banks internally classified loans to SpiceJet Ltd as “high risk” despite the airline not defaulting, people familiar with the matter said, getting a denial from the company Aerial.

IDFC First Bank, Yes Bank and Indian Bank are concerned about SpiceJet’s cash flow and have been in talks with the carrier for assurances as it has fallen behind on payments to some aircraft lessors, the sources said. who declined to be named given the sensitivity of the issue. .

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However, SpiceJet called the Reuters report false and baseless.

“None of our banks have placed our account on high alert or high risk,” SpiceJet said in a statement. “The same has been confirmed to us by our lenders.”

IDFC said it did not classify SpiceJet as a “red flag” account because it is a high performing account.

An IDFC spokesperson said the bank’s net exposure to SpiceJet was low at 460 million rupees ($5.8 million), of which 200 million rupees was covered by a government-sponsored scheme and backed by a “comfortable 2X safety blanket”.

The other two banks did not respond to requests from Reuters for comment on their SpiceJet loans.

One of the sources said they were “very, very concerned about the SpiceJet account and have categorized it as high risk and monitor it regularly”.

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Bankers say lenders often categorize loans internally when borrowers start showing signs of stress, and those gradings can vary from bank to bank.

SpiceJet shares fell 4.8% following the Reuters report. The title is down 30% since the start of the year.

SpiceJet’s approved fleet was cut in half for eight weeks this summer by regulators after several safety issues, and lessors filed formal requests to deregister four planes.

CREDIT FACILITIES

Some analysts are warning that regulatory action against SpiceJet could further weigh on its liquidity position amid high fuel prices and growing competition from new entrants like Akasa Air.

SpiceJet chairman Ajay Singh and his wife, who control 59% of the airline, had as of June 30 pledged shares representing a 26% stake for credit facilities for the company’s use, primarily to these three lenders, according to a regulatory filing.

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SpiceJet said last week it had settled all its major debts with the Airports Authority of India, a move that would see the airport operator release a bank guarantee of 500 million rupees.

Aircraft lessor TWC Aviation Capital, however, said SpiceJet had fallen behind in payments on the two Boeing Co 737-800 planes that TWC had placed with the airline.

“SpiceJet told us they would catch up on payment at the end of August once they secured a loan from a bank,” TWC director Ted Nozaki told Reuters.

“At this time, we do not intend to request the cancellation of these planes, but the situation may change if they cannot catch up with the payment, or if their payment is further delayed,” he said. declared.

The airline said in February it was in talks with lenders to raise additional funds.

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SpiceJet grew rapidly after rival Jet Airways suspended operations in 2019, taking over many planes formerly leased by Jet, but then struggled to make payments https://www.Reuters.com/article/ spicejet-india-lessors-idINKCN225062 when the COVID-19 pandemic hit and demand crashed.

SpiceJet’s auditors for the December quarter questioned in their attached statement its ability to remain in business without additional funding.

($1 = 79.5120 Indian rupees)

(Reporting by Nupur Anand in Mumbai and Aditi Shah in New Delhi; Additional reporting by Jamie Freed in Sydney and Tanvi Mehta in Bengaluru; Editing by Jan Harvey and David Holmes)

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