Troubled low-cost carrier SpiceJet on Thursday reported a Rs 275-crore loss for the December quarter, 59% wider than the loss it posted during the same period of the previous year. The airline’s revenue for the quarter fell 27% to Rs 1,311 crore. Its expenses fell 21% to Rs 1,550 crore on the back of downsizing efforts.
The airline said it had incurred a one-off exceptional expense of Rs 295 crore during the quarter, which includes write-offs of maintenance reserves, unproductive lease rentals, and provisions for impact of fleet reductions and early contract terminations.
At the end of the quarter, SpiceJet’s accumulated losses stood at Rs 3,233 crore and total liabilities exceeded its assets by Rs 1,636 crore, the company said in a statement.
“The last quarter was an extremely challenging quarter for SpiceJet as legacy issues, accumulated losses, and delays in expected and required re-capitalization eventually led to aircraft fleet reductions and consequential cancellations of flights in what is traditionally one of the best quarters of the year,” said SpiceJet’s chief operating officer Sanjiv Kapoor.
“The impact of aircraft fleet reductions negatively impacted both revenues and costs, as we had to combine flights to handle cancellations which severely limited available inventory to sell at high yields during peak season, while having to incur distress costs and absorb fixed costs and overheads over a much lower capacity (ASK) base,” added SpiceJet’s chief financial officer Kiran Koteshwar.
Despite massive fleet and route reductions, SpiceJet reported a 18% higher load factor during the quarter while its total RASK (revenue per available seat kilometre) was up 5% during the period. The airline’s yield was however down 12% due to cancellations.
SpiceJet had in December cancelled a large number of flights and delayed salaries to employees after being unable to pay oil companies and airports. However, relief came in the form of co-founder Ajai Singh agreeing to infuse cash into the airline.
According to the airline’s listings on the stock exchange, Kalanithi Maran has agreed to sell and transfer his entire shareholding, aggregating 350,428,758 equity shares amounting to a 58.46% stake, to Ajay Singh.
“As per civil aviation requirements, the company has filed an application with Ministry of Civil Aviation for security clearance of Ajay Singh for his appointment as director of the company. Appropriate intimation will be provided by the company after the appointment of Singh as Director of the Company,” SpiceJet said in a February stock exchange note.
However, experts say the airline will need to streamline and reduce costs further if it is to turn profitable in the future.
“The worst is behind us now. Operations are now back to normal, the company is in the process of changing hands and being imminently re-capitalised, staff morale is high, customer confidence is rapidly returning as seen in our daily bookings and in the response to our sales and promos, and the fleet is expected to grow again in time for the Summer schedule,” SpiceJet’s Kapoor added.