SpiceJet drops 5% after report says airline mulls laying off 1.4K employees

Shares of low-cost airline SpiceJet dropped 4.6 per cent to Rs 65 apiece in Monday's intraday trade on the BSE amid report that the company is considering laying off 15 per cent of its work force.

According to reports, cash-strapped SpiceJet is set to reduce its workforce by 1,400 employees, constituting nearly 15 per cent of its total staff, as part of cost-cutting measures amid the ongoing financial challenges.

The airline currently employs 9,000 personnel and operates approximately 30 aircraft, including eight wet-leased from foreign carriers. The carrier's salary bill reportedly amounts to Rs 60 crore, precipitating the need for workforce downsizing. Reports indicate that salary payments have been overdue for several months, leaving many employees awaiting their January remuneration. READ REPORT

At 12:35 PM, SpiceJet was hovering near the day's low level at Rs 65.15 per share (down 4.4 per cent) as against 0.5 per cent dip in the benchmark S&P BSE Sensex. Shares of rival low cost airline IndiGo, owned by InterGlobe Aviation, meanwhile were down 1.4 per cent.

Meanwhile, the fall also comes ahead of the Delhi High Court-set deadline where the airline was ordered to pay $4 million to its engine lessors Team France 01 SA and Sunbird France 02 SAS by February 15. 

The airline had sought more time for payment and said they could pay $1 million upfront. SpiceJet is supposed to pay close to $11 million to the lessors.

The court on December 19, 2023, had told the airline to pay the two lessors $450,000 by January 3 to settle its outstanding dues. Spicejet has paid this amount and the lessors are now pushing for a further payment to clear the amount outstanding. READ MORE

Amid this, the airline has been raising funds to augment fleet capacity and repay lessors. On December 12, 2023, the airline had said it would raise fresh capital of Rs 2,250 crore through issuance of securities.

Of this, it received Rs 744 crore as the first tranche of funds being raised through allotment of securities on a preferential basis on January 26, 2024.

During the July-September quarter of FY24 (Q2FY24), SpiceJet had reported consolidated net loss of Rs 449 crore, compared with Rs 830 crore in the year-ago period. The company had posted a profit of Rs 198 crore in the preceding June quarter (Q1FY24).

Consolidated revenue from operations, however, fell 27 per cent year-on-year to Rs 1,429 crore.

On the bourses, shares of SpiceJet hit a fresh 52-week high of Rs 77.5 on February 5, 2024, while it hit a 52-week low of Rs 22.65 on May 23, 2023. Over the past one year, shares of the airline have surged 94 per cent as against over 15 per cent gain in the benchmark index.