Cash-Strapped SpiceJet Announces Layoffs for 1,400 Employees

SpiceJet Airlines is planning to trim its workforce by 1,400 employees, representing approximately 15 percent of its total staff, as a strategic move to address financial strains and maintain investor confidence. The budget carrier, facing liquidity issues, has confirmed the decision in discussions with The Economic Times (ET), attributing the layoffs to the need for aligning operational costs with company requirements.

With a current workforce of 9,000 employees and a fleet of around 30 aircraft, including eight on wet lease from foreign airlines, SpiceJet faces a significant salary expenditure of Rs 60 crore. This financial burden has necessitated a reduction in workforce. According to reports, salary payments have been delayed for several months, with many employees still awaiting their January compensation. The airline has been making efforts to secure a fund infusion of Rs 2,200 crore. According to ET, however, investor apprehension may be impeding the capitalisation process. Despite this, the airline remains optimistic about fund procurement, asserting that funding initiatives are progressing as planned, with the majority of investors onboard.

During its peak in 2019, SpiceJet boasted a fleet of 118 planes, employed around 16,000 personnel, and held a domestic market share of 16.3 per cent in October 2019. Operating 516 daily flights, the airline flew to 51 domestic and nine international destinations. SpiceJet financial woes include the arbitral award issued to former promoter Kalanithi Maran and KAL Airways as a part of a 2018 ruling. SpiceJet had last year told the Delhi High Court that it was "struggling to stay afloat" after it was ordered to make this payment. Earlier this month, the low-cost airline was also fined Rs 30 lakh by the Directorate General of Civil Aviation (DGCA), along with Air India, for not rostering sufficient pilots, who are trained to land on low visibility (CAT-III landings) during the fog season.