SpiceJet Ltd. will lay off up to 15% employees by the end of March, according to a person with knowledge of the matter, as the cash-strapped carrier looks to cut costs.
The number of employees in the airline exceeds the required workforce for a reduced fleet post-Covid, the person told NDTV Profit on the condition of anonymity. The company has a fleet of 40 planes, down from about 120 prior to the pandemic.
The company had 10,060 employees as of March 2023, including 7,131 permanent staffers on its rolls, according to its annual report.
The workforce rationalisation will help the company save Rs 100 crore annually, SpiceJet said in a statement without giving a number. The layoffs are part of its turnaround and cost-cutting strategy to achieve profitable growth, it said.
In a recent meeting with top company officials, Chairperson Ajay Singh emphasised the importance of judicious spending, recognising that this opportunity for revival might not come again.
Singh is overseeing all major expenditures personally and has issued a stern directive of "perform or perish", making it clear that underperformers would face significant challenges in the revitalised airline, according to an internal note.
The cash-strapped carrier has prepared a Rs 900 crore overhaul plan, dubbed SpiceJet 3.0, comprising cost-cutting measures and improvements in the operational front, including fleet upgrades and on-time performance.
The company received the first tranche of Rs 744 crore late in January, more than a month after the low-cost carrier said it would raise Rs 2,250 crore through the issuance of securities to 64 investors.
Along with an additional Rs 160 crore from the Emergency Credit Line Guarantee Scheme, SpiceJet now has cash of over Rs 900 crore.
The revival plan comes at a crucial time for the airline as it juggles poor operational performance, beaten-down financials and a flurry of litigation.
In the quarter ended September, the budget carrier's consolidated net loss narrowed to Rs 449 crore from Rs 833 crore in the year-ago period. Revenue from operations fell 27% to Rs 1,429 crore.
The shares of SpiceJet Ltd. fell as much as 4.66% to Rs 65 apiece, the lowest level since Feb. 2. It was trading 2.64% lower at Rs 66.38 apiece, as of 2:38 p.m. against a 0.56% decline in the BSE Sensex Index.
It has risen 88.62% in the last 12 months. Total traded volume so far in the day stood at 0.6 times its 30-day average. The relative strength index was at 51.75 as of 2:40 p.m.
Out of four analysts tracking the company, one maintains a 'buy' rating and three recommend a 'hold,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 25.7%.
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