Chennai-based low-cost carrier SpiceJet discontinued 26 routes and seven stations, and further reduced capacity on 14 routes, during the financial year 2014, the airline has said in its latest annual report.
The stations discontinued by the airline include Bhopal, Allahabad, Pondicherry, Tiruchirappalli, Guangzhou, Riyadh and Bangkok.
The Kalanithi Maran-controlled airline, which is currently trying to turnaround its operations towards profitability, posted a record loss of Rs 1003.30 crore during FY14, up from Rs 191 crore during the previous fiscal.
After posting several quarters of losses, the airline's total liabilities exceeded its total assets by Rs 1,019.476 crore, as of March 31, 2014, SpiceJet said in its latest annual report. This had led to the auditors of the airline, S R Batliboi and Associates, raising concerns on the airline's ability to continue its functions.
Fresh equity shares in two tranches – 81.68 crore shares and 107.41 crore shares – would be subscribed by the promoters, the annual report said.
SpiceJet, which posted significant losses in three consecutive quarters, including the latest April-June period, will fund its losses through a combination of expected operational cash flow and funding support from promoters, a senior SpiceJet executive had recently told FE.
Aviation industry experts agree that SpiceJet is in dire need of fresh funding, but external investors may be difficult to find with several new entrants in the Indian aviation space to choose from.
“In all likelihood, it will be the promoters who will infuse the much-needed cash into the airline,” said the aviation practice head at a global consulting firm, on the condition of anonymity.
SpiceJet, which plans to turn around its operations by January 2015, has started filling up empty seats by offering heavy discounts, which have ensured that fixed costs like taxes and fuel charges are recovered, even if the airline doesn’t make any profit from those seats.
When asked about the airline's expansion plans, the SpiceJet official quoted above said that the airline's current focus was on maximising utilisation of its existing fleet, rather than expanding it. During the last two quarters, the airline has returned five aircraft to lessors.
SpiceJet's fleet stood at 58 aircraft at the end of March 31, according to data from the annual report, after the airline inducted seven Boeing 737s and re-delivered one aircraft during the fiscal.