SpiceJet comes up with plans to subdue its losses

SpiceJet Flight

Ajay Singh, the current owner of SpiceJet airlines, is planning to lay off as many as 2,000 employees to depreciate working costs and thereby help cut losses. The revival plan constituted by Ajay Singh is for the airline to focus on building up finances and refining operational efficiency. With an elation over Singh’s rescue plan for the cash-strapped airline diminishing, airline insiders and analysts have started pondering whether this amount would be sufficient enough or not.

The plan involves Rs 1,500-crore investment in the airline, in three tranches and has now been put in front of the aviation regulator DGCA.

SpiceJet reportedly suffered a loss of  ₹310crore in the July-September 2014 quarter against a loss of₹124 crore in the precursory quarter. The September quarter experienced a loss, however, lower in comparison to the ₹560-crore loss in the year-ago quarter which ended on 30 September 2013.

A source near to developments at SpiceJet revealed that ₹1500 crores is around about the amount of liabilities held by vendors and other stakeholders. This means stakeholders may not be able to pay off immediately and instead contracts might need re-negotiation.

Despite the fund, the airline would have to depend on its customers and bookings to generate working capital. Since the DGCA has already lifted the earlier ban for March and forth, now, SpiceJet can do forward bookings.

On January 15, SpiceJet’s BOD (board of directors) have approved a plan of principal shareholder and promoter Kalanithi Maran and KAL Airways Private Limited have decided to transfer the ownership, management and control of SpiceJet to previous promoter and director Ajay Singh. As of now, Kalanithi Maran and his company, KAL Airways, together hold a 58.46% stake in the airlines.

So, what we have to see now is that how the plans pan out for the company.

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