Why SpiceJet is paying salaries to employee in phases
What's the story
SpiceJet, a domestic airline, is facing financial challenges. The company has confirmed that it is paying employee salaries in phases as part of its financial management strategy. In an interview with CNBC-TV18, SpiceJet revealed that while salaries for May have been paid to junior and support staff members, payments to other employees are being made in a phased manner.
Operational challenges
Airline operating only 85 daily flights
SpiceJet's operational capacity has also been affected by the ongoing financial crisis.
The airline is currently operating only 85 daily flights, much lower than around 140 flights it had planned for the summer season.
The airline has a fleet of 14 operational aircraft, including three Airbus A320s on damp lease arrangements.
Market impact
SpiceJet's market share declines to 1.9%
SpiceJet's domestic market share has also taken a hit, falling from 3.9% in January to 1.9% in June.
The decline indicates a shrinking footprint in the domestic aviation sector over the first half of the year.
To stabilize its operations, SpiceJet has been taking steps such as inducting leased aircraft and addressing pending financial obligations with an aim to restore capacity and improve its financial position.
Legal challenges
Financial woes lead to legal scrutiny
SpiceJet's financial woes have also drawn legal scrutiny.
The National Company Law Tribunal (NCLT) is yet to rule on an insolvency petition filed by aircraft lessor Aviator ML against the airline over a payment default of around ₹60 crore.
The case is one of many legal disputes involving SpiceJet and its aircraft lessors and creditors in recent years.
Recovery attempts
Efforts to improve financial position
SpiceJet has been trying to improve its financial position through fundraising and settlement agreements with several lessors.
However, the airline still faces litigation from lessors such as Aviator ML, Sunbird France 02 SAS, and CIT Group Finance.
The airline's shares closed at ₹11.30 on Friday after a marginal increase of 0.27%.
However, the stock has been under pressure over a longer period with declines of 6.07% in the past week, 8.13% in the past month, and 15.42% in three months.