Cash-strapped SpiceJet to lay off 1,400 employees as cost-cutting measure

SpiceJet Airlines is set to reduce its workforce by 1,400 employees, constituting nearly 15 per cent of its total staff, as part of cost-cutting measures aimed at sustaining investor interest amidst ongoing financial challenges. The cash-strapped budget airlines confirmed the news with The Economic Times (ET), citing the necessity for aligning companywide costs with operational requirements as the rationale behind the staff reductions.

The airline currently employs 9,000 personnel and operates approximately 30 aircraft, including eight wet-leased from foreign carriers. The carrier's salary bill reportedly amounts to Rs 60 crore, precipitating the need for workforce downsizing. Reports indicate that salary payments have been overdue for several months, leaving many employees awaiting their January remuneration.

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.

At its height 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.