Shares of Spicejet fell 7 percent in intraday deals on Wednesday in an otherwise strong market after the aviation regulator DGCA issued a show-cause notice to the aviation stock. However, the stock recovered in afternoon deals to end higher.
The show-cause notice comes on the back of eight technical malfunction incidents in the last 18 days.
"The review (of incidents) transpires that poor internal safety oversight and inadequate maintenance actions (as most of the incidents are related to either component failure or system-related failure) have resulted in degradation of the safety margins," the notice stated.
The Directorate General of Civil Aviation (DGCA) has given SpiceJet three weeks to respond to the notice.
The scrip fell as much as 7 percent to its day's low of ₹35, however, it rebounded in afternoon deals to end 3.6 percent higher at ₹39. In comparison, the Sensex settled 1.1 percent or 616 points higher at 53,751.
The DGCA, in its notice, said that SpiceJet has failed to "establish a safe, efficient and reliable air service" under terms of Rule 134 and Schedule XI of the Aircraft Rules, 1937.
"Financial assessment carried out by DGCA in September 2021 has also revealed that the airline is operating on 'cash-and-carry' (model) and suppliers/approved vendors are not being paid on a regular basis leading to a shortage of spares and frequent invoking of MELs (minimum equipment lists)," it added.
Yesterday, SpiceJet B737 aircraft operating flight SG-11 (Delhi - Dubai) was diverted to Karachi due to an indicator light malfunctioning. The aircraft landed safely at Karachi and passengers were safely disembarked, the company said in a statement.
Last week, a SpiceJet aircraft operating from Delhi to Jabalpur returned safely to the Delhi airport after the crew had noticed smoke in the cabin while passing 5000ft.
Many such incidents have taken place with Spicejet flights recently.
The company has been in loss for the last three years. The carrier incurred posted a net loss of ₹316 crore in FY21 and ₹934 crore in FY20.