SpiceJet in ‘Advanced Talks’ to Raise Funds, Rejigs Top Deck
Airline to hit the funds trail after auditor raises concerns over its ability to stay afloat
Low-cost carrier SpiceJet on Tuesday said it is in “advanced talks” for raising funds, a few days after it announced high losses leading its auditors to report serious concerns on its ability to stay afloat. “We are in very advanced stages of a capital infusion discussion with an external entity that when completed will help us clean up our arrears and rebuild with confidence,” a SpiceJet spokesperson said on Tuesday without elaborating. But a source in the know said it is likely in talks with a Dubai-based entity. The Kalanithi Maran-controlled airline on Saturday said its quarterly loss rose five times to .` 321 crore while annual losses surged more than five-fold to a record high of .` 1,003 crore. The airline’s liabilities exceeded its assets by .` 1,019 crore. The carrier said it has been undertaking major cost-cutting measures to shore up its finances. “Our restructuring plan in terms of overall revenue and cost strategy is only just start- ing to take effect, and will intensify in the coming days; costs especially tend to be “stickier” than revenues and in the short-term tend to go up as there are re-structuring costs that are incurred. We will be going after cost optimisation on a war footing now,” said a spokesperson for the company. Sources in the know said the company may look to rationalise staff strength. The spokesperson, however, said: “There is no arbitrary target for anything. We are looking at all ways to optimize and reduce costs. We are not at all looking at mass cuts of our staff.” Meanwhile, SpiceJet’s tight- fisted measures have spooked its employees. For instance, more than a score of pilots have resigned from the airline in the last few months on lower-than-market pay scales. “We have been promised by the management since December that our salaries would be raised. That didn’t happen,” said a pilot who resigned in the fourth quarter this year to join Jet Airways. Until recently, SpiceJet paid pilots at least .` 1 lakh less than current market rates. “The confirmation on pay adjustment relative to the market was communicated to them (the pilots) last week. Pilot attrition has actually come down in the last three months compared to previous three months; many have told the company they have no plans to move anywhere, they see positive momentum and will do whatever they can to help SpiceJet succeed,” said the spokesperson. He didn’t elaborate on the jump but said it was a “meaningful amount”. Also on Tuesday, SpiceJet announced it promoted its former head of ground and airport services Kamal Hingorani to the newly created post of senior vice-president and head of customer experience. Meanwhile, the elevation of chief operating officer Sanjiv Kapoor to CEO is now pending approval at the ministry of home affairs, said a person in the know. Kapoor being a US citizen, his appointment would need special clearance.