SpiceJet, India’s sixth-largest airline, recently made headlines for its extensive workforce downsizing as part of a broader financial restructuring strategy. While the move aimed to stabilize the airline’s finances, it has significantly impacted thousands of employees. Here’s a closer look at how the changes have shaped the company and its workforce dynamics in FY24.
Credits: ABP Live
Workforce Downsizing: The Numbers
SpiceJet reduced its workforce by nearly 2,000 employees, a mix of permanent and temporary staff. The airline has acknowledged the challenges posed by this decision, stating it was necessary to align its costs with its operational scale. Despite this reduction, the company has shown a notable improvement in the earnings of retained employees.
For permanent employees, salaries now average 74% above the minimum wage, a significant rise from 61% previously. Female employees in this category saw even more progress, with their average earnings jumping from 37% to 56% above the minimum wage.
Among non-permanent employees, the story is more nuanced. Male workers earning above the minimum wage increased from 1% to 8%, while female workers saw a rise from 2% to 16%. However, a persistent gender wage gap remains, with male employees still earning more on average than their female counterparts.
Financial Adjustments in a Challenging Year
The workforce reduction was accompanied by a 9% decline in staff salaries and benefits, which dropped to ₹7,705.44 million in FY24, compared to ₹8,438.71 million in FY23. This reflects the combined impact of headcount reductions and cost rationalization.
Ajay Singh, SpiceJet’s Chairman and Managing Director, drew attention for his own remuneration package, which stood at ₹54 million in FY24, 211 times the median employee salary. Despite this, his pay remained well within regulatory limits, highlighting the airline’s attempts to balance leadership compensation with broader cost-cutting measures.
Operational Challenges: Fleet Reduction and Revenue Dip
SpiceJet’s financial challenges extend beyond workforce adjustments. The airline’s total income fell by 14% to ₹84,969.69 million, with operating revenue declining 21% to ₹70,499.74 million. The primary driver of this revenue drop was reduced fleet utilization, with the airline scaling back its fleet size to 65 aircraft by the end of FY24, down from 76 the previous year. Currently, SpiceJet operates 60 planes, six of which are wet-leased, but some remain grounded due to pending dues.
The airline did see a silver lining in its other income, which surged by 38% to ₹14,469.45 million, thanks to asset monetization efforts. However, the increased reliance on wet-leasing drove lease-rental charges up by 70% to ₹6,381.98 million.
Costs and Savings: A Mixed Bag
SpiceJet reported a 37% reduction in aircraft fuel costs, dropping to ₹29,825.62 million. Combined with the decrease in staff expenses, these savings helped offset rising operational costs in other areas, such as lease rentals.
Despite its financial constraints, the airline managed to narrow its standalone net loss significantly to ₹4,094.39 million in FY24, compared to a staggering ₹15,030.15 million the previous year. This improvement was also reflected in its EBITDA, which rose to ₹7,714.71 million, signaling a degree of operational recovery.
Gender Pay Gap: Progress but Room for Improvement
While the airline has made strides in raising earnings across employee categories, the persistent gender pay gap underscores the need for more equitable practices. The increase in wages for women employees, both permanent and non-permanent, is encouraging, but disparities remain. Addressing these inequalities could strengthen SpiceJet’s position as an employer and help attract a more diverse talent pool in the future.
Credits: Latestly
The Road Ahead
SpiceJet’s restructuring efforts showcase its commitment to stabilizing its financial footing, but the road ahead remains challenging. With reduced fleet utilization and operational scale, the airline must find ways to optimize its resources while maintaining service standards.
Progress is shown by the better financial figures, especially the reduced net loss and increased EBITDA. However, resolving important operational issues including fleet expansion, service dependability, and employee morale would be necessary to achieve sustained growth.
SpiceJet’s course in an increasingly competitive aviation industry will depend on its capacity to strike a balance between cost-cutting initiatives and strategic investments as it navigates these tumultuous skies. The airline is already on a recovery track, but it will take time to determine whether it can maintain the altitude.
