Gurgaon based low cost airline SpiceJet, on Friday, reported net profit of Rs 238.40 crore in the October- December quarter of the current financial year on the back of a substantial reduction in fuel cost...
Gurgaon based low cost airline SpiceJet, on Friday, reported net profit of Rs 238.40 crore in the October- December quarter of the current financial year on the back of a substantial reduction in fuel cost, rise in revenues due the increase in the number of passengers carried and better operating efficiency.
In the corresponding quarter of FY15 SpiceJet had posted a net loss of Rs 275.02 crore.
According to the company, this was the highest ever net profit posted by the company since its inception in 2005.
The low cost airline was supposed to wind up its operation last winter after debts ballooned and daily operations came to a grinding halt which propelled founder Ajay Singh to take the reins of the company in his hand.
As an indication of the turnaround in the fortunes of the airline, revenue for the quarter increased by 11.35% y-o-y to Rs 1,459.95 crore compared to Rs 1311.71 crore in the corresponding quarter. The recovery in operations within a year was possible due to the substantial reduction in crude oil prices that pulled down the cost of jet fuel which constitutes 40%- 50% of the operating cost of an airline.
In the given quarter, SpiceJet fuel expense decreased by 34.81% y-o-y to Rs 366.63 crore compared to Rs 562.37crore during the same period last fiscal.
According to sector experts, all airline companies will continue to benefit from low fuel prices and with prices slipping below $30 per barrel, expenses are expected to come down further.
Another major expense for airlines is the aircraft lease rentals which increased by 5.86 % y-o-y to Rs 227.72 crore.
Ajay Singh, chairman and managing director, SpiceJet, said that the company will continue to work on reducing legacy cost and increasing efficiency. “SpiceJet was back to near normal operations this quarter. While the margins remain slightly depressed due to wet lease operations, the Chennai floods and exchange losses, we are happy with the progress we have made so far,” added Singh
As result of the declining expenses and increased efficiency the Gurgaon based airline posted an operating profit (positive EBITDA) of Rs 279.70 crore as opposed to an operating loss of Rs 206.34 crore in the corresponding quarter.
As a result of the enhanced efficiency in operations and reduction in debts shares of Spicejet have rallied significantly by gaining 200% in the last six months even as benchmark indices tanked more than 7%.
This is the fourth consecutive profitable quarter for SpiceJet since its turnaround after December 2014. The airline recorded a load factor of 91.6 % for the quarter, the highest in the industry. This load factor reflects an increase of 8% over the same period last year.