SpiceJet faces new financial crisis over unpaid provident fund dues

SpiceJet faces new financial crisis: The last provident fund deposit by SpiceJet was made in January 2022 for 11,581 employees, as revealed by a query sent to the EPFO

Troubled airline SpiceJet may be heading towards escalating financial distress as it emerges that the company has failed to deposit employees’ provident fund (PF) dues for nearly two and a half years, according to a report by CNBC-TV18.

The last provident fund deposit by SpiceJet was made in January 2022 for 11,581 employees, as revealed by a query sent to the Employees’ Provident Fund Organisation (EPFO). The EPFO has since issued notices and summons to SpiceJet regarding the unpaid dues, but the airline has yet to respond.

This revelation adds to the airline’s ongoing financial struggles. SpiceJet’s shares have declined by 7.6 per cent this year, although they are up 86 per cent compared to the same period last year. In February, reports surfaced that the airline had delayed EPFO deposits due to a shortage of funds and liquidity constraints, also resulting in delayed salaries for January.

SpiceJet faces insolvency pleas

SpiceJet is currently embroiled in litigation with various lessors, some of whom are hesitant to extend aircraft leases. On April 18, the National Company Law Tribunal (NCLT) issued a notice to the low-cost airline in response to three insolvency pleas filed by aircraft lessors, citing a total default of Rs 77 crore.

KAL Airways seeks damages

In another legal battle, KAL Airways and Kalanithi Maran have sought over Rs 1,323 crore in damages from SpiceJet and its chief Ajay Singh, challenging a recent Delhi High Court order in the Supreme Court. The dispute dates back to February 2015, when Maran and his investment vehicle, KAL Airways, transferred their 58.46 per cent stake in SpiceJet to Singh, who agreed to take on the airline’s liabilities of around Rs 1,500 crore.

Maran and KAL Airways allege they paid SpiceJet Rs 679 crore for issuing warrants and preference shares, which were never allotted. This led Maran to initiate arbitration proceedings against SpiceJet and Singh.