As it emerges that the company has failed to deposit employees’ provident fund (PF) dues for nearly two and a half years, Troubled airline SpiceJet may be heading towards escalating financial distress. The previous provident fund deposit done by SpiceJet for its 11,581 employees was made two years back in January 2022. This was revealed by a query sent to the Employees’ Provident Fund Organisation (EPFO). Since then, the EPFO has issued notices and summons to SpiceJet pertaining to the unpaid dues. However, the airliner has not responded yet.
This revelation adds to the airline’s ongoing financial struggles. SpiceJet’s shares have declined by 7.6 per cent this year, although they are up 86 per cent compared to the same period last year. In February, reports surfaced that the airline had delayed EPFO deposits due to a shortage of funds and liquidity constraints, also resulting in delayed salaries for January.
Insolvency Pleas
Currently, SpiceJet is tangled in litigation with various lessors, wherein, some of whom are hesitant to extend aircraft leases. For instance, the National Company Law Tribunal (NCLT) issued a notice on April 18 to SpiceJet in response to three insolvency pleas filed by aircraft lessors, showcasing a total default of INR 77 crore.
KAL Seeks Damages
Furthermore, KAL Airways and Kalanithi Maran have sought over Rs 1,323 crore in damages from SpiceJet and its Chief Ajay Singh in another legal battle. The KAL and Kalanithi have challenged a recent Delhi High Court order in the Supreme Court. This dispute dates back to February 2015, when Maran and his investment vehicle, KAL Airways had transferred their 58.46 percent stake in SpiceJet to Singh. Singh had agreed to take on the airline’s liabilities of around INR 1,500 crore.
Both Maran and KAL Airways have alleged that they had paid SpiceJet Rs 679 crore for issuing warrants and preference shares. However, it was never allotted. This led Maran to carry out arbitration proceedings against SpiceJet and Singh.
