In a move that might optimise costs, beleaguered airline SpiceJet has decided to allow 50 captains on its rolls to exit the organisation by the end of December, despite the mandated six-month notice period stipulated by Directorate General of Civil Aviation (DGCA.)
Most of the pilots who are set to leave tendered their resignation in October-November period, when the airline was facing turbulent times. It has been said that most of them are likely to join competitors Jet Airways and IndiGo.
The airlines' letters to its captains sets the last working day as 31 December 2014, if they still wish to leave the organisation.
While a spokesperson for the airline refused to comment on the development, he explained that salaries for November had been cleared by the airline.
The move augurs well for the cash strapped airline, even as it presents a poor precedent. The airline is expected to save up to ₹7 crore over three months, with the effective wage bill coming down.
The DGCA rule stipulates pilots to serve a 6 month notice period from the date of resignation, unless the airline agrees to reduce the timeframe on a case to case basis. The rule was to help airlines seek out replacements and to invest in the required training, reported Financial Express.
The move could hurt the pilots financially, as they would be forfeiting a significant sum even as they await being called for service, which could have calculated their deployment on the original six-month window.
The cash strapped airline is fighting for its survival, and struggles to meet its daily working capital requirements of ₹8-9 crore. The Ajay Singh-led bid to recapitalise the airline is working its way through the gates, with the annual closedown of the American business markets, limiting US-based private equity funds committing to the investment.
The deal would see ₹1,500 crore infused into the airline.
SpiceJet has to reduce expenses and extras. The company has on its rolls 200 B737 commanders, double its current requirements. The airline operated 35 Boeing 737s in July, with the number falling to 20 today, of which only 18 are being deployed to service its 230 flights a day; supported by a fleet of 15 Bombardier Q400s flying regional routes.
The Sun Group-owned SpiceJet has outstanding amount of ₹2,000 crore and pays its fuel suppliers on a cash-and-carry basis, while it awaits fresh investments.