Cash-strapped airline SpiceJet on Thursday cleared all salary dues of its employees, according to sources aware of the development. The airline this week had raised INR 3,000 crore through a QIP. “Salaries of July and August of all employees and those hadn’t received June salaries were disbursed last evening,” said the the sources.This comes after the airline earlier revealed it has not paid around INR 220 crore in tax deducted at source (TDS) from employees’ salaries between April 2020 and August 2023 to tax authorities. The airline’s QIP was oversubscribed with 87 Indian and international institutions subscribing to the issue. In addition to the INR 3,000 crore raised through its QIP, SpiceJet is also set to receive an additional INR 736 crore from the previous funding round, further boosting its financial stability and growth plans.Meanwhile, the market share of SpiceJet airline has been shrinking, as per the latest DGCA data. In January, the airline had a market share of 5.6 percent and since then it has continuously fallen, and in August, it dipped to 2.3 percent. The airline had a largish share of 10.5 percent in 2021.SpiceJet has been facing a host of issues due to inability to raise funds. The airline has been defaulting on lease rental payment forcing aircraft lessors to move insolvency court against the airline.Its operational fleet has been reduced from 74 in 2019 to 28 in 2024. 36 aircraft have been grounded on account of dues and fund issues. Higher costs of working capital, escalating fixed costs, fixed rentals at airports have been weighing it down. Outstanding liabilities include nearly INR 3,700 crore due to lessors, and engineering & EDC liabilities and INR 650 crore of outstanding statutory duesIn recent weeks, SpiceJet’s troubles have mounted. Last month, the airline had to operate empty flights from Dubai as passengers were not allowed to check in due to the airline’s unpaid airport dues. A few weeks earlier in a similar case, some SpiceJet flights in Dubai had been cancelled due to non-payment of dues, with the company citing “operational reasons” for the cancellations. At the end of August, just when the Dubai disruption happened, the DGCA put SpiceJet under enhanced surveillance.The airline had temporarily placed 150 cabin crew members on furlough for three months due to lean travel season. It also delayed paying the salaries and defaulted on its provident fund commitments.However, before the QIP, another relief came for the airline. One of its biggest lessors Carlyle agreed to convert up to USD 50 million of dues into equity. SpiceJet and Carlyle will restructure obligations at INR 100 per share of SpiceJet. The agreement allows restructuring of certain aircraft lease obligations of SpiceJet aggregating to USD 137.68 million which upon settlement/waivers will be adjusted to USD 97.51 million. Carlyle will also consider purchasing a stake in SpiceXpress & Logistics Private limited, the cargo arm of the company via compulsorily convertible debentures.By March 2025, the airline will have a fleet of 40, or equivalent to what Akasa Air will have, and then add another 40 in the next year. Additionally, during periods of strong demand, the airline will take planes on short-term wet leases, SpiceJet chairman and managing director Ajay Singh said. For instance, it will induct eight aircraft for the festive and year-end season. “Despite shrinking in size, in FY24, there were eight airports where we had more than 50 percent of seat capacity and 40 routes where SpiceJet had a monopoly. We have 30 exclusive destinations under the regional connectivity scheme,” Singh said.
Published On Sep 26, 2024 at 09:00 PM IST
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