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SpiceJet defers May salaries, decides to pay employees based on hours worked

Spicejet has also said in its mail to employees that those members of staff in the lowest pay grades will be unaffected by the deferment of salaries and that they would be paid in full. (AFP)Premium
Spicejet has also said in its mail to employees that those members of staff in the lowest pay grades will be unaffected by the deferment of salaries and that they would be paid in full. (AFP)

  • The airline has informed its employees that it has decided to revert to a structure where staff will be paid as per work hours, due to the adverse impact of the second wave of coronavirus on revenue and cash flow of the company

NEW DELHI : With revenues taking a hit due to falling air traffic amid the second wave of covid-19 infections, no-frills airline SpiceJet Ltd has reverted to a salary structure based on the hours worked. It has also deferred salaries for May for a large section of its workforce.

“While the salaries for the month of May shall be credited to your bank accounts on 1 June, there will be (a) graded deferment of up to 35% for some of our employees. The deferred amount will be released from (the) second week of June 2021," SpiceJet informed its staff through an email on Sunday night. “Our colleagues in the lowest pay grades will be unaffected by this deferment and their salaries will be paid in full."

A copy of the email has been reviewed by Mint.

All Indian airlines have been adversely impacted by the covid-19 pandemic, which led to a fall in demand.

Collectively, Indian airlines will incur net losses of about 21,000 crore this financial year following the widespread disruptions caused by the second wave of the covid infections, and would require additional funding of 37,000 crore through FY23 to recover from the losses and debt, rating agency Icra has said in a recent report.

“As you are well aware, India is currently going through one of the worst covid-19 outbreaks in the world. Much like last year, the second wave of covid-19 has hit the Indian aviation industry the hardest, but this time the impact has been much more severe especially on our industry," SpiceJet said in the email to its employees.

“During this second wave passenger traffic has fallen to less than 10% as compared to the pre-covid levels," it added.

The Ajay Singh-controlled airline has also delayed payments to aircraft lessors due to the ongoing crisis. Recently, a UK court urged SpiceJet and Irish lessor Goshawk to mutually settle their differences, after the lessor took the airline to court for payment default.

According to reports, Goshawk affiliates Sabarmati Aviation Leasing Ltd and Falgu Aviation Leasing Ltd, have sued SpiceJet, along with Wilmington Trust SP Services (Dublin), for over $25.6 million in unpaid leases.

“Recognizing the sudden surge in the number of active covid cases across the country, decrease in passenger traffic and load factors, the government has recently reduced the capacity cap from 80% to 50% of the pre-covid levels capacity. This sudden drop due to unprecedented surge in covid cases coupled with varied travel restrictions across India has adversely affected our revenue and cash flows," it added.

“It is still unknown whether the cases have peaked-out or the traffic has bottomed-out," SpiceJet said in the letter.

When contacted, a SpiceJet spokesperson declined to comment on the development.

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