SpiceJet preparing for layoffs as financial troubles intensify: Report

Salary delays have stretched to months while fleet size has dropped, pushing the cash-strapped airline to seek govt funding as competition, operational constraints intensify, a media report said

India’s low-cost carrier SpiceJet is once again grappling with a severe financial crunch, prompting speculation it may cut more jobs, even as salaries are delayed and the carrier seeks an urgent infusion of fresh capital to sustain operations, The Economic Times reported Saturday.

 

The airline’s troubles come at a time when aviation fuel costs remain volatile. Chairman Ajay Singh recently acknowledged government support in moderating steep hikes in jet fuel prices, but the relief appears insufficient to offset the carrier’s deeper financial troubles. Unlike rivals IndiGo, Air India, and Akasa Air, which are backed by strong balance sheets or large conglomerates, SpiceJet continues to grapple with limited liquidity and operational constraints.

   

The airline recently also informed a court that it was unable to pay around ₹144 crore owed to Kalanithi Maran of Sun TV Network. 

  Salary delays amid shrinking fleet size

 

SpiceJet has initiated aggressive cost-cutting measures, including furloughs and potential layoffs, as it attempts to align expenses with its reduced operations. According to the report, citing internal communications, employees are being placed on leave without pay for up to six months starting April 2026.

 

The airline’s operational capacity has contracted sharply, with its fleet shrinking to a skeletal 13 aircraft from nearly 50 earlier. While the airline continues to rely on wet-leased planes, the reduced scale of operations has created a mismatch between staffing levels and operational needs.

 

With a workforce of approximately 6,800 employees, industry estimates suggest that over 500 employees could be impacted in the initial phase of furloughs, with further reductions possible if financial conditions do not improve. 

  Salary delays have worsened in recent months, adding to employee distress. Payments that were previously delayed by about a month are now reportedly pending for up to three months. Lower-paid workers, including ground handling and housekeeping staff, have been particularly affected, with some yet to receive salaries for earlier months.

 

The financial strain has also disrupted employee transitions. In several cases, engineers serving notice periods before joining other airlines have had their notice periods waived abruptly, leaving them without income during the transition.

 

SpiceJet has also revised pilot contracts, particularly for its Q400 aircraft fleet. Under the new structure, pilots are required to operate for 21 days followed by nine days off. While the airline has positioned the change as an effort to improve work-life balance, pilots say it effectively reduces their earnings by nearly 20 per cent, further impacting morale.

 

Rising dues and liabilities

 

The airline’s financial obligations continue to mount despite raising over ₹3,000 crore in 2024. Industry estimates suggest total dues may now exceed ₹4,500 crore.

 

Pending liabilities reportedly include statutory obligations such as tax deducted at source (TDS), provident fund contributions and goods and services tax (GST), with dues spanning several months and potentially crossing ₹100 crore. Former employees have also raised concerns over delayed settlements and unpaid benefits.

 

Working on a ‘funding lifeline’

 

Amid the mounting pressure, SpiceJet is exploring fresh funding options, including seeking support under the Emergency Credit Line Guarantee Scheme. The airline had previously availed funds under the scheme during the pandemic and is now reportedly seeking an additional ₹2,000 crore.

 

The scheme offers collateral-free loans with a moratorium on principal repayment for two years, making it a critical potential lifeline for the airline. However, it remains uncertain whether further support will be extended and under what conditions.

 

Shrinking network, growing competition

 

SpiceJet has been rationalising its network in response to reduced capacity, shutting down multiple routes including Ayodhya, Port Blair, Bangkok, Phuket, and Udaipur. The airline has indicated that further route adjustments may follow.

 

At the same time, competition in India’s aviation market is intensifying. Rival carriers are expanding fleets and increasing capacity, while domestic passenger demand has softened, from around 520,000 passengers daily to nearly 440,000, putting pressure on fares and yields.