SpiceJet, grappling with a series of challenges including financial instability and legal battles, is gearing up to lay off around 1,000 employees in a bid to cut costs and streamline operations amidst a reduced fleet size, officials revealed on Monday.
The no-frills carrier, plagued by financial woes and legal disputes, is considering further job cuts due to an excess workforce compared to the diminished fleet capacity. A decision on the exact number of layoffs is anticipated this week, according to insiders familiar with the matter.
Although a SpiceJet spokesperson acknowledged the implementation of measures aimed at achieving profitable growth, including manpower rationalisation, specific figures were not provided.
Reducing workforce
With approximately 9,000 employees on board, the airline is contemplating reducing its workforce by 10-15 percent, translating to a potential annual savings of up to Rs 100 crore, sources disclosed. Such a reduction could entail the termination of around 1,350 employees.
The planned layoffs are expected to affect various departments, with the final list currently under preparation. Management and consulting teams are collaborating to devise the layoff strategy, with input sought from all departments, according to sources.
Concern areas
The airline’s cessation of operations on certain Regional Connectivity Scheme (RCS) routes has resulted in surplus manpower at affected stations, particularly among lower-salaried staff, posing challenges for potential relocation efforts.
SpiceJet’s recent fund infusion has prompted a strategic reevaluation, with emphasis placed on prudent spending and operational optimization, as articulated by Chairman and Managing Director Ajay Singh during a recent meeting with senior officials.
What are the priorities?
Priorities include fleet modernisation, improved punctuality, and rigorous cost-cutting measures to streamline operations, as outlined in an internal memo.
SpiceJet, under the leadership of 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 suggest 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 burgeoning aviation market, SpiceJet has struggled, reporting 83.90 lakh passengers flown and a domestic market share of 5.5 percent in 2023.