Amidst financial instability and legal battles, SpiceJet, the budget airline, is preparing to lay off approximately 1,000 employees as part of its cost-cutting and operational streamlining efforts amidst a reduced fleet size, officials disclosed on Monday.
The airline, grappling with financial woes and legal disputes, is considering further reductions in its workforce due to an excess number of employees compared to the downsized fleet capacity. Insiders familiar with the matter anticipate a decision on the exact number of layoffs to be made this week.
While acknowledging the implementation of measures aimed at achieving profitable growth, including manpower rationalization, a SpiceJet spokesperson did not provide specific figures.
With around 9,000 employees currently, the airline is contemplating reducing its workforce by 10-15 percent, potentially resulting in annual savings of up to Rs 100 crore. This reduction could entail the termination of around 1,350 employees.
The planned layoffs are expected to impact various departments, with the final list currently being prepared. Management and consulting teams are collaborating to devise the layoff strategy, seeking input from all departments.
The cessation of operations on certain Regional Connectivity Scheme (RCS) routes has led to surplus manpower at affected stations, particularly among lower-salaried staff, posing challenges for potential relocation efforts.
Following a recent fund infusion, SpiceJet is reevaluating its strategy, focusing on prudent spending and operational optimization, as highlighted by Chairman and Managing Director Ajay Singh during a recent meeting with senior officials.
Key priorities include fleet modernization, improved punctuality, and rigorous cost-cutting measures to streamline operations, as outlined in an internal memo.
SpiceJet, led by Ajay Singh, is actively seeking funds from investors, having received the first tranche of Rs 744 crore out of a proposed Rs 2,250 crore fundraise through preferential securities issuance.
While the airline has availed approximately Rs 1,000 crore under the government’s Emergency Credit Line Guarantee Scheme (ECLGS), reports indicate delays in securing the necessary funds. SpiceJet has also faced challenges with lessors seeking legal recourse to repossess leased aircraft due to payment defaults.
Despite India’s growing aviation market, SpiceJet has faced challenges, reporting 83.90 lakh passengers flown and a domestic market share of 5.5 percent in 2023.
