In advanced talks to raise capital, no layoff plan in place yet: SpiceJet

The low cost airline has reported full year net loss of Rs 1,003 cr

SpiceJet has said it is carrying out a cost optimisation exercise and is in advanced talks to raise capital. The airline, which reported a loss of Rs 321 crore in the March quarter and a full year loss of Rs 1,003 crore, did not specify measures it would take to save costs.

The Centre for Asia Pacific Aviation estimates the airline needs at least Rs 1,200 crore to stabilise operations. Sources say the airline was preparing to lay off staff. The airline did not deny it was reducing personnel but said reports about it reducing ground staff by 30 per cent were untrue.

“No such thing has been discussed,” the airline said on Tuesday. “Our restructuring plan in terms of overall revenue and cost strategy is only just starting to take effect, and will intensify in the coming days; costs especially tend to be ‘stickier’ than revenues and in the short-term tend to go up as there are re-structuring costs that are incurred. We will be going after cost optimisation on a war footing,” it added.

Meanwhile, the airline said it had promoted Kamal Hingorani as senior vice-president and head of customer experience, besides hiring Ashwin Noronha as the head of ground and airport services.

Noronha would be joining SpiceJet from consulting and auditing firm KPMG and has 14 years of experience. “Our restructuring plan in terms of overall revenue and cost strategy is only just starting to take effect, and will intensify in the coming days; costs especially tend to be ‘stickier’ than revenues and in the short-term tend to go up as there are re-structuring costs that are incurred. We will be going after cost optimisation on a war footing,” it added. The restructuring costs include expenses related to re-delivery of planes upon end of lease contracts. This includes one off maintenance cost amongst others.

The airline said that its loss in Q4 (January-March) was 40 per cent lower than its loss in the previous low season (Q2) despite a further weakening demand environment and lower loads across all airlines. “Our network, product, pricing, on-time performance, service levels, and brand positioning has improved significantly in the past few months, and this will help us as the economy recovers (as is expected) post elections,” SpiceJet said.