SpiceJet reeling under financial stress, delays salaries, EPFO deposits: Report
A spokesperson in the Ajay Singh-promoted airline said that the salaries have been paid to over 75 per cent of the employees as of now. The pension fund deposits will be done soon.
- Feb 14, 2024,
- Updated Feb 14, 2024 12:00 PM IST
Cash-strapped SpiceJet has delayed payment of salaries, EPFO deposits amid the buzz that it is planning to lay off 1,400 employees in a bid to cut operational costs, a news report said. A spokesperson in the Ajay Singh-promoted airline said that the salaries have been paid to over 75 per cent of the employees as of now. The pension fund deposits will be done in the "near future", CNBC TV-18 reported on Wednesday.
Faced with financial woes, legal battles and other headwinds, the no-frills carrier might ask more staff to leave as there is excess manpower now compared to the number of planes in service. A final decision on the quantum of layoffs is expected this week, news agency PTI reported on Monday.
An airline official said it has around 9,000 employees and is looking at reducing the strength by 10-15 per cent. The official added that layoffs are necessary to reduce the overall costs and annual savings could be up to Rs 100 crore.
Currently, SpiceJet has a fleet of little over 30 aircraft apart from 10 planes that are on wet lease.
During a meeting with the airline's senior officials last month, SpiceJet chairman and managing director Ajay Singh emphasised the importance of judicious spending and that he will personally oversee all major expenditures.
The carrier will prioritise fleet upgrades, enhance on-time performance and cost-cutting measures will be implemented to streamline operations, according to an internal note last month.
In December 2023, SpiceJet expressed interest with the Resolution Professional (RP) of Go First and confirmed that it wishes to submit an offer post diligence. In an exchange filing, the airline said that the acquisition proposal is with a view to create Go First as "a strong and viable airline in a possible combination with SpiceJet".
"The Board of the company has recently approved and initiated process of raising fresh capital of about US$ 270 million to strengthen its financial position and provide resources to invest in growth plans," SpiceJet said.
In January, SpiceJet, Sharjah-based aviation company Sky One and Busy Bee submitted the Rs 5-crore bank guarantee and a formal expression of interest (EoI) for the bankrupt Go First Airlines.
These entities were given time for due diligence on the airline. Lenders have reportedly proposed to extend the timeline for the resolution process.
The budget carrier is yet to report its Q3 results. In December, SpiceJet reported that its consolidated net loss for the quarter ended September 2023 narrowed to Rs 449 crore, compared with Rs 830 crore in the year-ago period. The company had posted a profit of Rs 198 crore in the preceding June quarter.
SpiceJet, led by Ajay Singh, has experienced several changes in ownership since its establishment and is currently in the midst of securing funding from different investors.
On January 26, the carrier announced that it has received Rs 744 crore as the first tranche of the total Rs 2,250 crore proposed to be raised through the issuance of securities on a preferential basis.
There were reports that there has been a delay in raising the requisite funds.
The airline has also availed funds worth around Rs 1,000 crore under the government's Emergency Credit Line Guarantee Scheme (ECLGS) and Singh has committed to infuse Rs 500 crore.
SpiceJet's shares fell over 5% on February 14. At 11.40, shares of SpiceJet were trading at Rs 63.06, down by 3.92 per cent. The 52-week low of the stock is Rs 22.65 and 52-week high is Rs 77.5.
Also read: SpiceJet shares rise 5% as NCLT dismisses Wilmington Trust's insolvency plea
Cash-strapped SpiceJet has delayed payment of salaries, EPFO deposits amid the buzz that it is planning to lay off 1,400 employees in a bid to cut operational costs, a news report said. A spokesperson in the Ajay Singh-promoted airline said that the salaries have been paid to over 75 per cent of the employees as of now. The pension fund deposits will be done in the "near future", CNBC TV-18 reported on Wednesday.
Faced with financial woes, legal battles and other headwinds, the no-frills carrier might ask more staff to leave as there is excess manpower now compared to the number of planes in service. A final decision on the quantum of layoffs is expected this week, news agency PTI reported on Monday.
An airline official said it has around 9,000 employees and is looking at reducing the strength by 10-15 per cent. The official added that layoffs are necessary to reduce the overall costs and annual savings could be up to Rs 100 crore.
Currently, SpiceJet has a fleet of little over 30 aircraft apart from 10 planes that are on wet lease.
During a meeting with the airline's senior officials last month, SpiceJet chairman and managing director Ajay Singh emphasised the importance of judicious spending and that he will personally oversee all major expenditures.
The carrier will prioritise fleet upgrades, enhance on-time performance and cost-cutting measures will be implemented to streamline operations, according to an internal note last month.
In December 2023, SpiceJet expressed interest with the Resolution Professional (RP) of Go First and confirmed that it wishes to submit an offer post diligence. In an exchange filing, the airline said that the acquisition proposal is with a view to create Go First as "a strong and viable airline in a possible combination with SpiceJet".
"The Board of the company has recently approved and initiated process of raising fresh capital of about US$ 270 million to strengthen its financial position and provide resources to invest in growth plans," SpiceJet said.
In January, SpiceJet, Sharjah-based aviation company Sky One and Busy Bee submitted the Rs 5-crore bank guarantee and a formal expression of interest (EoI) for the bankrupt Go First Airlines.
These entities were given time for due diligence on the airline. Lenders have reportedly proposed to extend the timeline for the resolution process.
The budget carrier is yet to report its Q3 results. In December, SpiceJet reported that its consolidated net loss for the quarter ended September 2023 narrowed to Rs 449 crore, compared with Rs 830 crore in the year-ago period. The company had posted a profit of Rs 198 crore in the preceding June quarter.
SpiceJet, led by Ajay Singh, has experienced several changes in ownership since its establishment and is currently in the midst of securing funding from different investors.
On January 26, the carrier announced that it has received Rs 744 crore as the first tranche of the total Rs 2,250 crore proposed to be raised through the issuance of securities on a preferential basis.
There were reports that there has been a delay in raising the requisite funds.
The airline has also availed funds worth around Rs 1,000 crore under the government's Emergency Credit Line Guarantee Scheme (ECLGS) and Singh has committed to infuse Rs 500 crore.
SpiceJet's shares fell over 5% on February 14. At 11.40, shares of SpiceJet were trading at Rs 63.06, down by 3.92 per cent. The 52-week low of the stock is Rs 22.65 and 52-week high is Rs 77.5.
Also read: SpiceJet shares rise 5% as NCLT dismisses Wilmington Trust's insolvency plea