Cash-strapped Indian budget airline SpiceJet is facing a turbulent future. According to a report by The Economic Times, the company has announced a drastic cost-cutting measure: laying off 1,400 employees, a staggering 15% of its workforce. This move aims to stem financial losses and regain investor confidence in the wake of mounting challenges.
The downsizing affects 1,400 employees across various departments, shrinking the airline’s manpower significantly. Reportedly, SpiceJet operates around 30 aircraft currently, including eight wet-leased planes. While the company justifies the layoffs as necessary to “align companywide costs with operational requirements,” the move throws a spotlight on its underlying financial struggles.
A hefty salary bill of ₹60 crore hangs heavy on SpiceJet’s finances, leading to delayed salary payments for several months and causing anxiety among employees. Adding to the woes, the airline seeks a ₹2,200 crore fund infusion to stay afloat, but the report highlighted that some investors seem to have developed cold feet, raising concerns about the company’s stability.
The situation starkly contrasts with SpiceJet’s peak in 2019, when it boasted a fleet of 118 planes and a workforce of 16,000. Today, the airline holds a 4% market share, facing stiff competition from rivals like Akasa Air. SpiceJet’s troubles do not end there. The airline faces a court order to settle outstanding dues of $4 million to engine lessors by February 15th. Failure to comply could lead to legal action, further complicating the already precarious situation.
The layoffs highlight the airline’s fragile financial standing. Regaining investor confidence and navigating legal hurdles are crucial for SpiceJet’s survival. The coming weeks will be critical as the airline seeks to weather the storm and chart a course for a stable future.
Meanwhile, the news news resonates with the broader layoff trend in the tech industry. Giants like Amazon, Google and Meta have announced workforce reductions, citing economic slowdowns and the need to adapt to changing market conditions.