SpiceJet shares fall on reports of job cuts

Budget carrier operator SpiceJet witnessed downturn in its share value following reports of impending layoffs. Shares fell as much as 4.6 per cent to hit an intraday low of Rs 65.05, as media reports indicated the company's plans to slash 1,400 jobs in a bid to sustain investor confidence.

SpiceJet operates with approximately 9,000 employees and a fleet of around 30 planes. Eight of these planes are leased from foreign carriers, complete with their respective crew and pilots.

The airline has officially confirmed the impending job cuts, attributing them to the necessity of aligning operational costs with company requirements. Reports suggest that SpiceJet's Rs 60 crore salary expenditure has been a driving factor behind this decision.

Reports indicate that termination calls have already begun, signalling the initiation of the job reduction process. Moreover, SpiceJet has been grappling with delayed salary payments for several months, exacerbating the strain on its workforce.

Meanwhile, SpiceJet is in the process of securing a Rs 2,200 crore fund allocation. However, concerns linger among certain investors, casting shadow over the funding prospects. A company spokesperson has refuted rumours of funding delays, asserting that progress is underway with fund infusion, with majority of investors subscribed.

In 2019, SpiceJet reached its peak with a fleet of 118 aircraft and a workforce comprising 16,000 employees. However, its current trajectory reflects a stark contrast, indicative of the challenges facing the aviation industry. Akasa Air, SpiceJet's closest competitor in terms of market share, maintains a fleet of 23 planes and employs 3,500 individuals, commanding a similar market share within the domestic aviation landscape.

As of 11:11 am, SpiceJet shares traded 2.82 per cent lower at Rs 66.26, underperforming the Sensex which was down 0.24 per cent.

The company commands market capitalisation of Rs 4,534 crore.