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Updated February 14th, 2024 at 13:19 IST

SpiceJet delays salaries, EPFO deposits amid layoff speculations: Report

SpiceJet is contemplating further staff reductions, with an excess workforce relative to the number of operational aircraft.

Reported by: Business Desk
Man stuck in SpiceJet lavatory
SpiceJet | Image:PTI
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SpiceJet, the budget carrier, finds itself entangled in financial distress, as reports emerge of delayed salary payments and employee layoff plans amid ongoing operational challenges. According to a report by CNBC TV18, the airline has deferred the disbursement of salaries and EPFO deposits, raising concerns over its liquidity position.

Despite assurances from a spokesperson that salaries have been disbursed to over 75 per cent of the workforce, the delayed pension fund deposits are expected to be rectified in the "near future," as per CNBC TV-18 report. The company's struggles are exacerbated by its plans to potentially lay off 1,400 employees, a move aimed at trimming operational costs amid a challenging business environment.

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Facing a confluence of financial woes, legal battles, and operational hurdles, SpiceJet is contemplating further staff reductions, with an excess workforce relative to the number of operational aircraft. Sources suggest that the airline is considering a reduction of its workforce by 10-15 per cent, targeting annual savings of up to Rs 100 crore.

The carrier's chairman and managing director, Ajay Singh, has stressed the imperative of prudent spending, personally overseeing major expenditures in a bid to navigate the turbulent economic landscape. An internal note highlights the company's commitment to fleet upgrades, enhancing on-time performance, and implementing cost-cutting measures to streamline operations.

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In a bid to bolster its financial position, SpiceJet has initiated steps to raise fresh capital amounting to approximately $270 million. The move aims to fortify the company's financial resilience and provide resources for future growth initiatives.

Furthermore, SpiceJet's engagement with the Resolution Professional of Go First signals its interest in acquiring the bankrupt airline, with plans to create a robust and sustainable entity in collaboration with SpiceJet.

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However, delays in raising the requisite funds have raised concerns, even as the airline avails funds under the government's Emergency Credit Line Guarantee Scheme (ECLGS) and receives commitments from Singh to infuse additional capital.

As SpiceJet grapples with its financial challenges, attention turns to its impending Q3 results, with stakeholders eagerly awaiting updates on the airline's performance amidst the turbulent economic landscape and industry headwinds.

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Published February 14th, 2024 at 13:19 IST

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