Indian low-cost airline SpiceJet is set to go through a mass layoff process, with more than 1,000 jobs in the line of fire. The airline attributes this development to optimizing and restructuring its finances as it looks to maintain the investors’ interest.
SpiceJet is handing out the pink slip to 1,400 employees in a significant reduction of its workforce. According to The Economic Times (ET), the airline is doing this to cut costs as it looks to grow its business and retain the interests of its investors. Sources have revealed that the current salary bill of the airline is over $7 million.
The carrier currently has 9,000 employees on its payroll, and the current layoffs account for around 15% of its employee strength. People aware of the matter have told ET that employees have already started getting the calls.
A spokesperson of the airline also confirmed the development and said, “This is to ensure an alignment of companywide costs as against operational requirements.”
The airline has been struggling financially for a few years now. At the peak of its operations before COVID-19, SpiceJet had 16,000 employees and more than 115 airplanes in its fleet. Today, it has less than 30 active aircraft for daily operations, per ch-aviation.
The pandemic years were particularly hard on the carrier, which was also ordered by the government to ground several of its planes following numerous instances of midair incidents.
The airline has also struggled in the past to pay timely salaries to its employees, sometimes delaying it for two months in a row and crediting it in a graded manner. There have also been reports of SpiceJet not depositing the employees’ pension funds for several months, although it said in August last year that the process of fixing that was being looked into.
Then, of course, there have been numerous court cases by the airline’s creditors and lessors due to delay or non-payment of dues. The airline has been reprimanded by Indian courts on more than one occasion and sometimes has to make out-of-court settlements. Recently, it was ordered to pay $4 million to its engine lessors by February 15.
The recent job cuts come at a time when SpiceJet has been looking to get its finances back in order to rebuild its network and fleet. In January alone, it received more than $108 million in funding, aligning with its previous announcement that it seeks to raise $270 million by issuing securities.
While the latest development might raise questions about the carrier’s overall financial health and also its future prospects, SpiceJet has said that there has been no effect on its funding plans, with ET quoting a spokesperson as saying, “There aren’t any funding delays and we are progressing well with our fund infusion and have already made our public announcements accordingly. We will be making additional announcements as we progress on the next tranche. The majority number of investors have subscribed.”
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