SpiceJet is processing employee salary payments in stages due to ongoing cash flow shortages. The airline's market share has dropped to 1.9%, and it faces a critical NCLT ruling regarding an insolvency petition from a lessor over unpaid dues.
SpiceJet is facing significant operational and financial stress, as confirmed by reports that employee salaries are being disbursed in phases. While the company stated that junior and support staff have received their May salaries, payments for other staff levels remain staggered with no clear timeline for full resolution. This situation highlights the persistent cash flow challenges currently impacting the airline's ability to maintain standard financial commitments.
Impact on Flight Operations and Market Share
The airline's operational footprint has shrunk notably in recent months. SpiceJet is currently operating 85 flights daily, which is significantly lower than its original plan of 140 flights for the summer season. The company’s active fleet is now limited to 14 aircraft, including three Airbus A320s that are being operated under damp lease arrangements. Consequently, the airline's presence in the domestic aviation market has weakened, with its market share declining from 3.9% in January to 1.9% as of June.
Legal Challenges and NCLT Proceedings
Beyond internal cash flow issues, SpiceJet remains locked in multiple legal battles. The National Company Law Tribunal (NCLT) has reserved its order on an insolvency petition filed by the aircraft lessor Aviator ML. This specific dispute involves a claim of approximately ₹60 crore related to a leased Boeing 737 aircraft. If the NCLT admits this petition, it could trigger a formal corporate insolvency resolution process, adding to the uncertainty surrounding the airline’s financial structure.
SpiceJet has dealt with a series of similar legal challenges from various lessors and creditors over the past year. While the company has reached settlement agreements with some parties, including Aircastle and Celestial Aviation, it continues to face litigation from other entities such as Sunbird France 02 SAS and CIT Group Finance regarding unpaid lease rentals and other contractual obligations.
Stock Market Context
Investors have reacted to these operational and legal hurdles by reducing their exposure to the stock. SpiceJet shares closed at ₹11.30 on Friday, showing a significant downward trend over the medium and long term. The stock has recorded a year-to-date decline of 62% and a one-year drop of 69.08%. These numbers reflect the ongoing investor concern regarding the company's ability to navigate its debt and liquidity problems.
The most important monitorable for shareholders is the upcoming NCLT decision, which will determine whether the airline enters insolvency proceedings. Beyond this legal outcome, investors will likely track the company's ability to stabilize its flight schedule, improve its cash flow position, and reach settlements with its remaining creditors to prevent further legal escalation.