SpiceJet likely to lay off 1,000 employees

Has missed Jan 10 deadline to clear December wage duesfor junior staff

Beleaguered low-cost carrier SpiceJet is likely to lay off about 1,000 employees in the next few weeks to rein in costs, several sources in the airline told Business Standard. Last week, the carrier had asked about 60 pilots who had resigned to leave after serving only half the six-month notice period.

SpiceJet’s overall staff count is about 5,000.

With losses piling up every day, achieving operational profit is believed to be a precondition for infusion of fresh funds by potential investors, led by founder-promoter Ajay Singh. Accumulated losses stand at about Rs 3,000 crore and liabilities about Rs 1,400 crore, including about Rs 200 crore to Airports Authority of India.

An emailed questionnaire, as well as SMSes seeking comment, sent on Saturday weren’t responded to by the company spokesperson. Repeated calls on Monday, too, remained unanswered.

“The airline is expected to lay off employees in batches of about 100 across departments such as ground staff and crew. In all, lay-offs are expected to touch about 1,300. New investors are negotiating hard with promoter Kalanithi Maran. They have asked Maran to share part of the liabilities by putting in about Rs 600 crore before they infuse fresh capital,” said an airline source.

SpiceJet is being forced to lay off staff because it has cut its Boeing B737 fleet from 35 in July last year to 17. The airline also operates 15 Bombardier Q400 aircraft. At an industry average of about 110 employees an aircraft, SpiceJet needs only about 1,900 for its Boeing fleet.

“With a reduction in aircraft, flights and stations, lay-offs are inevitable,” said a second source.

The airline has missed several deadlines to clear salaries for December.

After missing the Directorate General of Civil Aviation's deadline of January 7, the airline had, last week, promised to pay the wages of junior employees such as ground staff by January 10. For those in the higher pay bracket --- management and pilots — it had promised to do so by January 20. However, it is yet to clear the dues. SpiceJet had also delayed the payment of November salaries by 20 days.

On Monday, the SpiceJet stock closed at Rs 18.40 on BSE, up 0.55 per cent.