 "SpiceJet clears December wage dues for junior employees")
A day after announcing that promoter Kalanithi Maran would hand over control of troubled carrier SpiceJet to new investors led by Ajay Singh, the airline on Friday cleared December salary dues for a section of employees such as ground staff who fall in the lower pay bracket. The development comes even as the airline gears up to lay off over a fifth of its 5,000 employees across functions to cut costs.
“On Friday, junior employees in grade-5 category received their wages for December. However, senior management and pilots are yet to receive salaries,” a person close to the development said.
While the civil aviation ministry allowed the low-cost carrier to start taking forward bookings beyond March 31, 2015 after it submitted its revival plan for government approvals on Thursday, the airline had not re-opened bookings as of 6 pm on Saturday. Forward bookings are critical for SpiceJet to shore up daily revenues. As an indication, such bookings accounted for Rs 12-13 crore daily revenues till November last year, but on Saturday dropped to Rs 3-4 crore.
Under the revival plan, SpiceJet is due to get Rs 1,500 crore in three equal tranches by March from the investors, while Maran will pay off part of the Rs 1,400 crore liabilities. Maran, and associate company KAL Airways, will offload the entire 58 per cent promoter stake to Singh and investors like JP Morgan. Singh is also expected to seek waiver from an open offer from capital markets regulator Securities and Exchange Board of India.
Ajay Singh, who has started SpiceJet in 2005 and later sold it to Maran in 2010, told Business Standard in an interview published on January 16 that he hopes to turn the company profitable in 2015-16. Singh would look to expand the fleet to 40-42 by summer this year, from 32 currently – this includes 17 Boeing 737s and 15 Q400s. As recently as July last year, the airline has 35 B737s, which it since has halved to reduce costs. Daily flights have thus dropped to 200 on Saturday, from 340 in July 2014.
Singh added that stations will also be reduced as part of the restructuring, indicating that further job cuts are likely, and that flash sales would likely continue but would be better planned.
“On Friday, junior employees in grade-5 category received their wages for December. However, senior management and pilots are yet to receive salaries,” a person close to the development said.
While the civil aviation ministry allowed the low-cost carrier to start taking forward bookings beyond March 31, 2015 after it submitted its revival plan for government approvals on Thursday, the airline had not re-opened bookings as of 6 pm on Saturday. Forward bookings are critical for SpiceJet to shore up daily revenues. As an indication, such bookings accounted for Rs 12-13 crore daily revenues till November last year, but on Saturday dropped to Rs 3-4 crore.
Under the revival plan, SpiceJet is due to get Rs 1,500 crore in three equal tranches by March from the investors, while Maran will pay off part of the Rs 1,400 crore liabilities. Maran, and associate company KAL Airways, will offload the entire 58 per cent promoter stake to Singh and investors like JP Morgan. Singh is also expected to seek waiver from an open offer from capital markets regulator Securities and Exchange Board of India.
Ajay Singh, who has started SpiceJet in 2005 and later sold it to Maran in 2010, told Business Standard in an interview published on January 16 that he hopes to turn the company profitable in 2015-16. Singh would look to expand the fleet to 40-42 by summer this year, from 32 currently – this includes 17 Boeing 737s and 15 Q400s. As recently as July last year, the airline has 35 B737s, which it since has halved to reduce costs. Daily flights have thus dropped to 200 on Saturday, from 340 in July 2014.
Singh added that stations will also be reduced as part of the restructuring, indicating that further job cuts are likely, and that flash sales would likely continue but would be better planned.