SpiceJet Paying Salaries in Phases Amid Persistent Cash Crunch
Key Takeaways
- •SpiceJet is paying employee salaries in phases as the airline grapples with ongoing liquidity constraints.
- •The National Company Law Tribunal has reserved its order on an insolvency petition involving a 60 crore rupee default claim against SpiceJet.
- •SpiceJet's stock has declined 62% year-to-date and approximately 69% over the past year, closing at 11.30 rupees per share.
- •The airline's market share has eroded significantly as rival IndiGo has strengthened its position in India's aviation market.
- •SpiceJet continues to operate under enhanced DGCA surveillance while simultaneously seeking to raise fresh capital to stabilize its operations.
SpiceJet has confirmed to CNBC-TV18 that it is releasing employee salaries in phases as the airline continues to face liquidity constraints.
The Indian low-cost carrier, headquartered in Gurugram, is simultaneously operating well below its planned summer schedule as it navigates ongoing financial challenges. The airline is also awaiting a ruling from the National Company Law Tribunal (NCLT) on an insolvency petition filed against it. The NCLT had earlier reserved its order on a plea concerning a ₹60 crore default claim against SpiceJet. The insolvency proceedings carry added significance for India's aviation sector, where Go First's collapse into bankruptcy in 2023 and Jet Airways' 2019 shutdown remain cautionary examples of budget carriers succumbing to financial distress.
On the stock market, shares of SpiceJet ended at ₹11.30 on Friday, gaining 0.27% for the day. However, the stock has remained under sustained pressure over an extended period. Over the past week, shares have declined 6.07%, while the monthly and three-month losses stand at 8.13% and 15.42%, respectively.
On a year-to-date basis, the stock has fallen 62%. Over the past one year, it is down 69.08%, and over the last three years it has declined 61.37%.
SpiceJet is one of India's major budget airlines and has faced mounting financial and operational difficulties in recent periods, including reduced fleet utilization and disputes with creditors and lessors. The carrier's market share has declined notably as larger rival IndiGo has consolidated its dominance in India's fast-growing aviation market. SpiceJet has also been operating under enhanced regulatory surveillance by India's Directorate General of Civil Aviation (DGCA), which has previously restricted the airline from operating at full capacity due to safety and financial concerns. The phased salary disbursements come as the airline continues efforts to raise fresh capital to stabilize operations.
Source: CNBC-TV18