Even as it awaits investors, troubled low-cost carrier SpiceJet is busy trimming costs. On
Friday, the airline’s management asked around 50 captains of its Boeing
737 fleet to leave by the end of the month, despite the six-month
notice period stipulated by aviation regulator Directorate General of
Civil Aviation (DGCA). Most of these pilots had resigned around
October-November this year and were expected to join rivals like IndiGo
and Jet Airways around March.
The move will help SpiceJet cut the
wage bill, resulting in savings of about Rs 7 crore over three months.
This is significant given the carrier is finding it tough to meet daily
working capital costs of Rs 8-9 crore. The airline is currently on a
cash-and-carry mode with oil companies (it needs to make daily payments)
while the Airports Authority of India, whom it owes over Rs 200 crore,
has extended it credit till December 31. All in all, the airline has
liabilities of over Rs 2,000 crore towards various vendors, lessors and
even the taxman.
“Further to your resignation, the management has
approved your release from SpiceJet wef 31 December 2014 … If you stand
on your decision to resign we will be relieving you with your last
working date with SpiceJet as December 31 2014,” a letter seen by FE
said.
According to a DGCA rule put in place a few years back,
pilots have to serve a six-month notice period if they resign, unless
the airline reduces this by itself. In most cases, airlines want pilots
to serve the full notice period because of the time and investment
required for recruits.
A SpiceJet source added on the condition
of anonymity, “This is a very wrong move. As per the rule pilots have a
six-month notice period, so whichever new airline they are joining has
booked training slots accordingly. Asking them to leave early will mean a
salary loss for pilots because they cannot join the new airline early
and will have to stay home.”
SpiceJet is keen to reduce its pilot
strength because it has sharply cut its fleet in the past few months to
cope with its precarious financial position. It currently has about 200
B737 commanders, though it needs only about half of that. Compared to
35 Boeing 737 aircraft in July, the airline today has just about 20. Of
this, only 18 are operational, as confirmed by COO Sanjiv Kapoor on
Friday. Additionally, the airline has 15 smaller Bombardier Q400
aircraft that fly regional routes. SpiceJet is currently operating 230
flights a day, down from about 340 in July 2014.
Incidentally,
the airline’s white knight and ex-promoter Ajay Singh wants to restore
SpiceJet to its lost glory by regaining the fleet and network strength
after he takes charge of the airline. FE had reported in its December 22
edition that Singh was in talks with lessors to take back aircraft that
have been returned over the past months.
Source: http://www.financialexpress.com
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