After announcing fundraising plans, cash-strapped SpiceJet has clarified the reports of the sacking of reportedly at least 1,000 employees from the company, saying the decision to implement cost-cutting measures will ensure it achieves “profitable growth”. The move, it says, will save up to ₹100 crore for the company.
The Gurugram-based airline, as reported by a news agency, is planning to let go around 1,000 employees, as the carrier faces issues on several fronts -- financial stress, legal cases, and regulatory troubles. Ajay Singh-led SpiceJet has a total employee strength of around 9,000. The current churning is said to be somewhere 10-15%.
Amid the development, SpiceJet shares are trading 3.92% down at ₹65.51 on the BSE today. The scrip opened a gap up at ₹68.50 but soon slipped into the red territory at ₹65.49, taking the airline company's m-cap to ₹4,481.73 crore.
Clarifying the development, a SpiceJet spokesperson said: "As part of our turnaround and cost-cutting strategy, following the recent fund infusion, SpiceJet has initiated several measures, including manpower rationalisation, aimed at achieving profitable growth and positioning ourselves to capitalise on the opportunities in the Indian aviation industry. Through this initiative alone, we anticipate an annual saving of up to INR 100 crore.”
To sail the existing tide, SpiceJet has said is making efforts on all fronts, including fundraising. In December last year, the carrier received the board’s approval for fundraising of ₹2,250 crore by issue of equity shares on a private placement basis to financial institutions, foreign institutional investors (FIIs), high net-worth individuals (HNI) and private investors.
To deal with legal woes, the low-cost carrier, in September last year, had completed its payment of $1.5 million to the global investment bank and financial services firm Credit Suisse as per the directive issued by the Supreme Court of India.
It completed the first tranche of capital infusion worth ₹744 crore on January 26, 2024. The company's board approved the allotment of 5.55 crore equity shares on a preferential basis to 54 subscribers. It also approved the allotment of 9.33 crore warrants, offering the option to apply for and be allotted an equivalent number of equity shares, on a preferential basis to Elara India Opportunities Fund and Silver Stallion.
The company also paid ₹77.5 crore and ₹100 crore, respectively, to its former promoter Kalanithi Maran's Kal Airways Private Ltd in September 2023.
Meanwhile, in the July to September quarter of FY24, the airline’s net loss narrowed to ₹449 crore against ₹830 crore in the corresponding period of the previous year. The company’s revenue, however, surged 27% year-to-year to ₹1,429 crore.
