SpiceJet to Lay Off 1,000 in Cost-Cutting Move

SpiceJet to Lay Off 1,000 in Cost-Cutting Move

SpiceJet, one of India’s leading low-cost airlines, has announced that it will lay off around 1,000 employees, or 15% of its workforce, as part of its cost-cutting and turnaround strategy. The move comes after the airline received a fresh infusion of funds from an undisclosed investor. The airline said that the layoffs will help it save up to Rs 100 crore annually and position itself for profitable growth in the competitive Indian aviation market.

SpiceJet’s reasons for layoffs

The layoffs are expected to affect employees across departments and locations, especially those working on routes that have been discontinued under the Regional Connectivity Scheme (RCS). The RCS is a government initiative to provide air connectivity to underserved and unserved regions of the country. SpiceJet had won bids to operate on 78 RCS routes, but had to stop some of them due to operational and financial constraints. The airline has also stopped wet leasing planes from other operators and is focusing on upgrading its own fleet of over 30 aircraft. Wet leasing is a practice where an airline leases an aircraft along with its crew, maintenance and insurance from another airline.

Challenges faced by SpiceJet

The airline is facing financial woes, legal battles and regulatory challenges due to its debt-ridden balance sheet and operational issues. The airline reported a net loss of Rs 112.6 crore in the quarter ended December 2023, compared to a net profit of Rs 78.2 crore in the same period a year ago. The airline’s total debt stood at Rs 3,934 crore as of December 2023, up from Rs 3,491 crore in March 2023. The airline is also involved in a legal dispute with its former promoter Kalanithi Maran over a share transfer agreement. The airline is also facing scrutiny from the Directorate General of Civil Aviation (DGCA) over safety violations and flight cancellations.

Future plans of SpiceJet

SpiceJet Chairman and Managing Director Ajay Singh said that he will personally oversee all major expenditures and prioritise fleet upgrades, on-time performance and cost-cutting measures. He said that the airline is confident of overcoming the current crisis and capitalising on the opportunities in the Indian aviation industry, which is expected to grow rapidly in the post-pandemic era. According to the International Air Transport Association (IATA), India is projected to become the third largest aviation market in the world by 2024, surpassing the UK.

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