SpiceJet faces financial turbulence: Rs 355 crore unpaid in PF and Tax dues revealed

PTC News Desk: SpiceJet has revealed that it has not paid Rs 135.3 crore in Provident Fund (PF) contributions for its employees between April 2020 and August 2023, according to a filing with the Bombay Stock Exchange (BSE). Additionally, the airline owes Rs 220 crore in tax deducted at source (TDS) from staff salaries for the same period. These liabilities are part of a larger financial strain on the airline, which also includes disputed amounts of nearly Rs 72 crore in TDS and Rs 84.5 crore in Goods and Services Tax (GST), dating back several years.

The disputed TDS payments cover the assessment years 2009/10 to 2013/14, and the GST dues range from July 2017 to March 2019. The airline is also facing outstanding service tax payments, some dating back to April 2006, amounting to Rs 1.71 crore, with additional interest and penalties.

SpiceJet’s financial challenges have led to difficult decisions, including placing 150 cabin crew on furlough without pay for three months. The company hopes to address its cash crunch by raising Rs 3,000 crore through a sale of securities to qualified institutional buyers, setting a floor price of Rs 64.79 per share.

A discount of up to 5 per cent may be offered, subject to shareholder approval. The proceeds from the sale will be used to pay statutory dues, such as PF and TDS, as well as settle outstanding liabilities to creditors, including aircraft lessors and airport-related fees.

In its filing, SpiceJet stated that it plans to allocate ₹601.5 crore to clear statutory dues, including Rs 297.5 crore for TDS and Rs 156.4 crore for PF contributions. Additionally, Rs 150.3 crore will be used to pay airport-related fees. The majority of the funds, however, will be directed towards settling debts related to aircraft and engine lessors, engineering vendors, and the maintenance of existing aircraft.

Currently, 36 of SpiceJet’s 58 aircraft are grounded due to issues such as the availability of spare parts and optimal resource management. The airline plans to use a portion of the funds to restore 24 grounded aircraft, including models from the Boeing 737 family and Q400 aircraft.

SpiceJet’s operational fleet has significantly reduced from 74 aircraft in 2019 to just 28 in 2024. To regain its position in the competitive aviation market, the airline plans to set aside ₹370 crore for the induction of new aircraft, signaling its strategy to expand its fleet and service network.

Meanwhile, SpiceJet shares fell by 5.23 per cent, closing at Rs 73.72 on the BSE on Tuesday, reflecting investor concerns over the airline’s financial health.

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