In June this year, half of SpiceJet’s flights were grounded for eight weeks, following a DGCA order in response to technical snags and security concerns. This only added to the budget airline’s woes, since it had been struggling to remain afloat due to rising costs and mounting debt. The domestic carrier reported a loss of Rs 1,725 crore in FY22, and now it has sent 80 of its pilots on unpaid leave for three months, till it can add new aircraft to its fleet.
Hit by price rise and cashflow issues
SpiceJet’s liabilities have currently surpassed its assets by more than Rs 6000 crore, and its financial situation doesn’t seem to be getting any better. The airline has been delaying salaries to its staff, and Vistara has soared ahead of it in terms of market share. Last month, SpiceJet also initiated the process to raise funds worth Rs 2000 crore from investors to tackle record airline fuel prices and address cashflow issues.
Till its seven new Boeing 737 Max aircraft arrive in December, the carrier is planning to wet lease airplanes for a short period. But it won’t require services of the pilots sent on leave without pay, since the crew provided by the lessor will manage operations. The move comes at a time when SpiceJet’s new rival Akasa has given a 60 per cent raise to its pilots. Reports by the Economic Times suggest that the cost saved through leave without pay, will allow SpiceJet to pay pilots more later on.
Comeback halted midway?
The Gurugram-based low-cost airline was on the verge of collapse in 2014 when Ajay Singh took control and steered it back towards the skies after settling dues worth Rs 2,200 crore. A year later, SpiceJet’s stocks appreciated by 300 per cent, before turbulence hit again in the form of a ban on Boeing Max aircrafts which were included in its fleet. This was just before the pandemic clipped the aviation sector’s wings, which further hit SpiceJet’s hopes of a turnaround.
Earlier this year, reports also indicated that Ajay Singh was in talks with a Middle Eastern airline to offload a part of his 60 per cent stake in SpiceJet. The carrier also faces allegations of not depositing tax deducted on source with authorities, after delaying staff salaries for August.
