SpiceJet, once a 110-aircraft carrier, is roughly back to the same squeeze position as it was about a decade ago. The airline is losing money left, right and centre and was recently trying to do another fundraising via the issuance of shares and debentures, where it would try to raise about INR 2,250 Crores (USD 271 Million). However, the fundraiser is stuck with only one-third of the money arriving in the bank.
SpiceJet to cut one-sixth of its workforce.
In the wake of the ongoing rough times on the carrier, which has about 4% market share and only about 30 operational aircraft, SpiceJet is getting set to prune up to about 1,400 to 1,500 people from its 9,000 strong workforce in the coming days. The 300 people per aircraft ratio looks high anyway, and SpiceJet has been withdrawing from various sectors recently. The airline has had to wet lease aircraft to keep its capacity going while its aircraft are grounded or, in many cases, stuck in litigation with lessors wanting their planes or engines back. There is also ongoing litigation with the previous owners of the airline, the Marans, which is ongoing with a substantial amount of money due to be paid to them as per a court order.
SpiceJet is terming this move as a cost-cutting measure, no less, and the lack of any spin around this move indicates that the airline might not be out of the woods yet. The airline has not taken delivery of any new aircraft in a long time, despite having 129 outstanding orders for the 737 MAX, and it has only taken delivery of 7 737 MAX aircraft in 2018.
SpiceJet CEO Ajay Singh had earlier noted that he would oversee all “large spends” to keep the head above water. The Economic Times, which first reported about the upcoming cuts at SpiceJet, also maintained that the airline, at the peak of its operations, had 118 aircraft and 16,000 employees in 2019.
Bottomline
SpiceJet is getting ready for significant layoffs, which could lead to up to 1,400 to 1,500 people losing their jobs. Due to its current financial situation, the airline has maintained that these are cost-cutting moves to get the airline more runway. The exact headcount is unknown at the moment.
What do you make of the financial health of SpiceJet?
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