Indian carrier SpiceJet will layoff 1,400 employees in a bid to cut costs and attract investors, a report said on Monday. This number constitutes 15 per cent of the airline’s total workforce and the layoffs have already started, it added.
According to the Economic Times (ET) report, the airline has reportedly been delaying salary payments for several months. It claims that many employees have not received their January pay. Its total salary bill currently stands at ₹60 crore.
So, the layoffs are being done to align companywide costs against operational needs.
A SpiceJet spokesperson, in a statement, said that the airline has initiated several measures to cut cost that are likely to help it save ₹100 crore annually.
“As part of our turnaround and cost-cutting strategy, following the recent fund infusion, SpiceJet has initiated several measures, including manpower rationalization, aimed at achieving profitable growth and positioning ourselves to capitalize on the opportunities in the Indian aviation industry. Through this initiative alone, we anticipate an annual saving of up to ₹100 crore,” the spokesperson said.
Eyeing a fund infusion of ₹2,200 crore, SpiceJet said the funding plans are on track and an announcement is expected soon.
With 9,000 employees working with the airline currently, SpiceJet operates about 30 planes. Of these, eight planes are wet leased from international carriers, along with the crew and pilot. In 2019, when the airline was at its peak, SpiceJet had a fleet of 118 planes and 16,000 employees.
Akasa Air, with 3,500 employees for a fleet of 23 planes, is SpiceJet’s nearest rival.
Last week, the Delhi High Court told low-cost carrier to pay ₹50 crore to former promoter Kalanithi Maran and KAL Airways within six weeks, as part of an arbitral award of 2018.
In November, Raymach Technologies filed an insolvency petition against Spicejet under Section 9 of the Insolvency and Bankruptcy Code, 2016, for a default of ₹2.7 crore. The company claims to have provided business consulting and technical support services to the airline. On February 8, the budget airline informed the National Company Law Tribunal that it was trying to settle the matter with the vendor.
The share price of the airline fell after the news surfaced. On Monday morning, the shares of the company were down 3.8 per cent and were trading at ₹65.59 apiece on BSE.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
