SpiceJet will defer paying full salaries in May as the carrier faces a serious cash crunch during the second wave. While employees will receive some of their salaries, up to 35% could be deferred due to the crisis. Moreover from June, employees will only be paid by the number of hours worked, sharply cutting wages for some.
According to Moneycontrol, SpiceJet has sent out an email to all its employees explaining the changes to their salary structure. While all staff will receive their paychecks today, many will see a deferment of up to 35% of their original salaries. This is the second time in as many months that SpiceJet has retroactively cut salaries for its employees.
The decision comes as SpiceJet struggles to stay afloat during India’s second wave of COVID-19. The severe wave has crippled the domestic market, with passenger numbers down to a fraction of even March 2021 levels. With international traffic negligible, airlines have found themselves in a precarious position.
For May, employees will begin to receive their deferred salaries from the second week of June onwards. However, this will very likely depend on the airline’s financial health at the time. The only staff exempt from these cuts are those in the lowest salary bracket, who will continue to receive their full wages.
For SpiceJet employees, the salary deferment may not come as a surprise. For their April paychecks, the staff saw anywhere between 10-50% of their salaries “deferred” due to the crisis to be paid on a later date. While April saw traffic take a dramatic downward turn, it’s unclear why SpiceJet announced this month’s changes retroactively too.
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However, the worst is not yet over for SpiceJet. The airline will be returning to a pay-based-on-hours-worked model from June, which means many employees might see sharp cuts to their salaries. While the carrier has said that the changes will be made “maintaining basic thresholds,” it’s unclear how much that amounts to for staff.
Just this week, India slashed domestic capacity from 80% to 50% to protect struggling carriers like SpiceJet. This means that even fewer pilots and crews will be needed in the next few months, further impacting wages for employees.
Once again, this is similar to cuts SpiceJet implemented last year when it stopped paying pilot salaries for two months. While pay by hours-worked will cut down costs for the airline, it will also deeply impact thousands of employees. We will know more about this next month as SpiceJet may implement further reductions.
Sadly, none of this comes as a surprise. SpiceJet was already struggling to pay lease rentals even before the second wave, explaining why it is deferring salaries at the first sign of trouble. For now, the coming months will remain challenging for the airline as it tries to survive this crisis.
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