The crisis is big, after Jet Airways and Kingfisher, now there are alarm bells for SpiceJet?
The airline sector has been considered very difficult and challenging in terms of business. Many challenges including high cost of operation, huge capital requirement make this business risky. This is the reason why the history of the airline sector is full of failure stories. During the last few years, everyone has seen Kingfisher and Jet Airways being grounded. Now the danger of adding a new name SpiceJet in this episode is hovering over the head. SpiceJet, once synonymous with rapid success in the Indian airline sector, has been facing new troubles one after the other for the past few months. Let us know in detail today what kind of challenges are in front of SpiceJet and how is the future of this airline going to be.
Pilots being sent on leave without pay
The latest chapter in SpiceJet’s crisis is with the pilots. The company is going to send about 80 pilots on leave without pay. Of these, about 40 pilots are from the Boeing 737 fleet, while the remaining 40 pilots are from the Q400 fleet. Although the company says that it has got more pilots than necessary, due to which it is sending them on leave, but industry experts say that this move of SpiceJet is related to its financial crisis.
The company is also facing financial difficulties in meeting its day-to-day needs. SpiceJet has also been forced to cancel several flights in recent times. Most of the pilots who have been asked by SpiceJet to go on leave without pay for three months are on domestic flights.
More than half the planes are out of flight
According to the company, the pilots sent on leave will be gradually reinstated on new aircraft. The company plans to add seven new Boeing 737 MAX aircraft to its fleet. These aircraft will start joining the company’s fleet from December. The company had 95 aircraft at the beginning of 2021, which has now reduced to 50. The company has had to ground many aircraft due to lack of spares and maintenance. About 10 Q400 aircraft of the company are not able to fly due to lack of parts. At the same time, SpiceJet is returning the old 737 aircraft included from the Jet Airways fleet.
SpiceJet’s financial position is bad
People associated with the airline industry say that SpiceJet faces serious financial challenges. The company has faced difficulties in some way so far, but now it is in dire need of capital to come out of the crisis. SpiceJet’s challenges may have gotten serious in recent months, but the company has been in trouble for the past three years. After the first two catastrophic accidents, the company had to withdraw Boeing 737 MAX aircraft from operations in March 2019. These aircraft were economical in terms of fuel consumption, so their exclusion increased the cost of SpiceJet.
One after the other jerks
SpiceJet was trying to overcome this crisis that in the beginning of the year 2020 came the Kovid epidemic, which brought bad days for the aviation sector. Due to this, the operations of all airline companies came to a complete halt for some time. Like other airlines, SpiceJet also faced the epidemic in some way. After this, as the aviation sector was trying to recover from the impact of the pandemic, SpiceJet faced the challenges of regulatory restrictions. Due to the said ban due to technical glitches, the company had to take out of operation about half of its fleet. The situation of SpiceJet became such that it started defaulting in paying the installments of the leased aircraft. Due to this, in August last year, the company was forced to register 6 aircraft.
Employees are getting less money than pre-covid
SpiceJet’s troubles did not end there. A ransomware attack took place on the company’s servers in May, after which the company had to postpone the results of the March and June quarters. The company released the financial results on August 31 after a delay of months, but was forced to seek additional time for the annual general meeting. The company also faced problems on the staff front. SpiceJet was not able to increase the salary of its employees due to financial troubles. Due to this, SpiceJet employees were working on less money than the salary before the Kovid epidemic. Because of this they were angry.
Huge losses are happening continuously
If you look at the operations of SpiceJet too, then the impact of the problems is clearly visible. SpiceJet’s once more than 10 per cent share in the domestic aviation market has come down to less than 8 per cent. The company was once at number two in the Indian market, but in just six months it slipped to the fifth position. The company had a loss of Rs 458 crore in the March 2022 quarter, which increased further to Rs 789 crore in the June 2022 quarter. During the financial year 2021-22, the company had a huge loss of Rs 1,725 crore, which was 73 per cent more than a year ago. These figures become serious because even though air traffic has started increasing, SpiceJet is not in a position to take advantage of it.
The future of the company is blurred due to these reasons
Some of the latest developments in the airline industry have also been difficult for SpiceJet. The Tata group has made its name for the state-owned airline Air India by making the biggest bid. After this, the operations of Air India have started improving. The Tata group is aggressively working on increasing the stake of Air India. On the other hand, the operation of a new airline Akasa Air has also started. In this company, the money of veteran late investor Rakesh Jhunjhunwala has been invested. It is clear that both Air India and Akasa Air have no financial problems, while SpiceJet’s situation is completely opposite.
There is only one thing in SpiceJet’s favor and that is the image of promoter Ajay Singh. Ajay Singh has a mastery over the sinking business. He has changed the fortunes of SpiceJet in the past too. Now it has to be seen whether Ajay Singh can save SpiceJet this time or not.
