Amid Financial Crunch, SpiceJet Delays Salaries, EPFO Deposits Of Employees: Report

Amid financial challenges, legal disputes, and various obstacles, the airline may consider further staff reductions

SpiceJet Airlines, which is currently facing financial constraints, has reportedly postponed salary payments to several of its employees. At a time when the airline is reportedly in the process of laying off around 1,000 employees, the delay in salary disbursements and in depositing the funds owed to pension accounts and taxes deducted from salaries has happened.

“Salaries have been paid to over 75 per cent of the employees, and the pension fund dues will be deposited in the "near future”,” CNBC TV18 cited an airline spokesperson as saying.

Amid financial challenges, legal disputes, and various obstacles, the airline may consider further staff reductions, as there is currently a workforce surplus relative to the number of planes in operation. A final decision regarding the extent of layoffs is anticipated this week, according to a report by news agency PTI on Monday.

According to an airline official, the company currently employs approximately 9,000 individuals and is contemplating reducing this workforce by 10-15 per cent. The official emphasised that layoffs are essential to lower overall costs, with potential annual savings estimated to reach up to Rs 100 crore.

Reports of a cash crunch spell trouble for the airline. According to the report, some lessors are hesitant to extend the lease agreements for the planes leased to SpiceJet. The lease for at least eight operational aircraft is set to expire in March 2024.

Failure to renew leases for these eight aircraft could result in SpiceJet having 35 planes grounded by the end of March. Nonetheless, the company remains optimistic. Currently, the airline possesses 42 leased aircraft, including those utilised for freight operations. "The airline, in fact, is actively engaged in discussions for additional long-term lease contracts, and the fleet, if anything, will only grow from here," the spokesperson said.

Meanwhile, in a meeting with the airline's senior officials last month, SpiceJet chairman and managing director Ajay Singh underscored the significance of prudent spending and stated that he would personally supervise all significant expenditures.