SpiceJet delays pilot salaries as it seeks government-backed loan
What's the story
SpiceJet has delayed salary payments to many of its pilots since March, as per internal communications reviewed by Reuters. The airline is now seeking an emergency loan under a government-backed credit scheme to stabilize operations. SpiceJet was India's second-largest domestic carrier in 2019 with a market share of around 15%. However, it has now slipped to fourth place with just 3.4% market share due to long-standing financial troubles exacerbated by the US-Iran conflict in West Asia.
Financial impact
Pilots haven't been paid since March
SpiceJet had 375 pilots as of March, but many have not received their salaries for months. This was confirmed by two pilots and a Reuters review of chats from a WhatsApp group with over 180 members. In one such message, Virendra Malhotra, SpiceJet's Senior Vice President of Flight Operations, acknowledged the delay in salary disbursement and assured that February salaries would be released soon.
Company statement
SpiceJet responds to reports of delayed payments
Responding to the reports of delayed payments, SpiceJet accepted that there have been some delays. "Employee payments continue to be disbursed in a phased manner, consistent with the process followed over the past several months, and a majority of employees have already been paid for March," said SpiceJet. The messages from pilots highlighted how these payment delays are impacting their daily lives amid global concerns over pilot fatigue and mental health.
Funding pursuit
Airline pursues funding under Emergency Credit Line Guarantee Scheme
SpiceJet is actively pursuing funding under the Indian government's "Emergency Credit Line Guarantee Scheme." This scheme allows airlines to access seven-year government-guaranteed loans of up to ₹1,500 crore. The airline said it was making all efforts to achieve normalcy but "extraneous factors," including the ongoing West Asia crisis, were affecting operations and cash flows. Despite these challenges, SpiceJet expects to normalize business activities in the coming months.
Business operations
SpiceJet's stock has fallen 60% this year
SpiceJet currently has an operational fleet of 21 aircraft. The airline recently returned a Boeing 737 MAX jet to commercial service and finalized a lease for three Airbus A320 aircraft, which will join its fleet in July. This is to meet the growing passenger demand. SpiceJet's stock has fallen 60% this year compared to India's biggest airline IndiGo's 13.8% decline.
Flight operations
Scheduled flights fall from January to May
SpiceJet's scheduled flights fell from 4,494 in January to 3,053 in May, according to aviation analytics firm OAG. The airline has deferred pay to staff during various periods of financial trouble since at least 2014. Its recent decline followed the global grounding of Boeing 737 MAX in 2019, which left about a 10th of its fleet grounded. The recovery was further hampered by COVID-19 pandemic and several legal/payment disputes.