Ex-pilots file insolvency plea against SpiceJet over ₹3 crore in unpaid dues | Company Business News

Two former pilots of SpiceJet Ltd have approached the Delhi bench of the National Company Law Tribunal (NCLT), seeking to declare the airline bankrupt over unpaid dues totalling ₹3 crore. 

The petition, alleging that the no-frills airline failed to pay salary arrears, deferred payments, final settlements, allowances, and overtime dues, adds to SpiceJet’s ongoing litigations in the NCLT, the Delhi high court, and the Supreme Court over other unpaid dues.

Read this | SpiceJet insolvency claims: Are creditors leveraging IBC forum for settlements?

Filed by former captains Sameer Breja and Karan Gupta, who joined SpiceJet as first officers in 2011 and were promoted to captains in 2016, the plea claims that the airline owes them ₹1.21 crore and ₹1.31 crore, respectively. The dispute traces back to 2020, when SpiceJet implemented temporary salary cuts due to the coronavirus pandemic, promising deferred payments once operations returned to “normalcy.” 

However, the airline later tied these payments to an operational benchmark of 26,000 flight hours per month—a condition the pilots claim was arbitrarily introduced and never disclosed during hiring.

“The operational creditors (pilots) were surprised to see such an email since the corporate debtor had never come up with any such figure to justify normalcy. In fact, during the pre-COVID period or even at the time of appointment, SpiceJet had never disclosed such figures to define normalcy of flight operations,” the plea says. “Thus, introducing this figure of 26,000 hours per month was not only arbitrary but also an after-thought by the Corporate Debtor to evade its liabilities.”

Mint has reviewed a copy of the plea. SpiceJet has yet to comment on the matter. Mint also reached out to the pilots, but they declined to comment on record, citing the matter as sub judice.

The petition, filed under Section 9 of the Insolvency and Bankruptcy Code (IBC), also claims that in June 2020, the airline retroactively revised their compensation, further reducing their pay. The pilots have alleged that they had no choice but to accept the changes amid the pandemic. Despite repeated attempts over the years, they say SpiceJet never fully honoured even the revised terms and failed to provide final settlement agreements after their resignations in 2023.

NCLT observations

The pilots’ plea has requested the appointment of an interim resolution professional, a public announcement inviting claims from other creditors, and a moratorium on SpiceJet’s assets under Section 14 of the IBC.

During a brief hearing on 4 February, the NCLT remarked that it is “neither a labour court nor a writ court” and observed that the petition appeared to be a pressure tactic to compel payment. The tribunal adjourned the case to 7 March without issuing a notice to SpiceJet.

“As SpiceJet did not pay the operational debt owed to us, we had no option but to initiate insolvency proceedings before the NCLT. A labour court was not an option since the dues are over 1 crore,” said Piyush Singh, managing partner at PSP Legal, which represents the pilots.

Singh also noted that several other pilots have approached them with similar concerns. “Four to five more pilots are in touch with us, but their dues are below 1 crore, which is the minimum required to file an insolvency plea. We are exploring other legal remedies for them,” he said.

SpiceJet’s challenges

The petition adds to a growing list of insolvency cases against cash-strapped SpiceJet. As of November 2024, at least 16 such claims had been filed, primarily by aircraft lessors and vendors. Of these, five have been settled and withdrawn, two are under settlement discussions, seven remain pending, and two have been dismissed. None have resulted in full insolvency proceedings.

In December, SpiceJet resolved a $16 million dispute with aircraft lessor Genesis and settled a $90.8 million claim from Export Development Canada for $22.5 million, securing ownership of 13 Q400 planes.

Earlier, Mint had reported that creditors have increasingly used NCLT petitions as leverage to secure settlements, with most cases being withdrawn before advancing in insolvency litigation.

SpiceJet has faced significant financial and operational challenges since the pandemic. Its domestic market share has plummeted from 7.3% in January 2023 to 2.3% in August 2024, with 36 of its aircraft currently grounded. As per the data by Directorate General of Civil Aviation (DGCA), SpiceJet carried a little over 6 million passengers in calendar year 2024 and held a market share of 3.7. 

To revive operations, the airline plans to bring  30 Boeing 737 MAX aircraft back into service over the next 12-15 months. On 29 January, it reintroduced its first ungrounded 737 MAX into operations.

Despite efforts to stabilize its finances—including raising ₹3,000 crore through a qualified institutional placement—the airline remains mired in legal disputes.

Also read | SpiceJet’s path to recovery: A tough, long climb to reclaim market share

With growing creditor pressure and operational constraints, the airline’s future hinges on its ability to restructure debt and navigate legal hurdles. Whether this latest insolvency plea escalates or results in a settlement remains to be seen.