SpiceJet on Tuesday posted its second consecutive quarterly profit on the back of lower aviation turbine fuel expense coupled with a higher passenger load factor.
Low-cost carrier SpiceJet on Tuesday posted its second consecutive quarterly profit on the back of lower aviation turbine fuel expense coupled with a higher passenger load factor. The company’s net profit in the April-June quarter stood at Rs 71.8 crore against a net loss of Rs 124 crore in the same period last year. This is also the company’s highest ever first quarter profit. However, the company’s total income in the period was 34% lower at Rs 1,106.3 crore from the same period last year.
That the fall in crude prices aided the company in large measure to post a turnaround becomes clear due to a sharp decline in the US crude prices due to which SpiceJet’s fuel expenses declined 53.6% at Rs 359 crore in Q1 against Rs 773 crore in the same period last year. Overall, the company’s expenses were down 42% at Rs 1,035.61 crore. This can be attributed to the airline’s exercise to shrink fleet and, hence lowered capacity, during the previous fiscal, as it struggled with financial difficulties.
“In line with year-on-year capacity reduction of 33% that was driven by fleet reductions in late 2014, the airline’s revenue for the quarter was down 34% against the same period last year. Costs for the quarter were down 42% y-o-y,” SpiceJet said in a statement.
On a sequential basis, SpiceJet’s revenue for the June quarter was up 41%, while profit was up over three-fold.
“The airline’s profit for the quarter was slightly suppressed due its wet-lease operations which are by nature more expensive than conventional leases, and by a weaker rupee relative to previous year,” said a SpiceJet statement.
“The wet lease aircraft were taken up to address the short-term capacity shortage arising out of aircraft unavailability and the desire to rebuild the network as quickly as possible, and it is expected that these will be replaced by traditional dry-lease aircraft in the coming months,” it added.
SpiceJet recorded a load factor of 89.8% for the June quarter, an increase of 14.8% over the same period last year. On a unit basis, revenue per available seat kilometre (RASK) was flat year-on-year, while cost per available seat kilometer (CASK) was down 13%.
“We have made significant improvement in our cash flows and liquidity position, and have been discharging our obligations on time. We are emphatically no longer under financial stress. During this quarter, we have re-inducted an aircraft that had previously been returned and are in discussions to re-induct few more, which reflects renewed lessor confidence in SpiceJet,” said Kiran Koteshwar, chief financial officer, SpiceJet.
“As our performance continues to improve, we will be in a position to gradually pay off historical liabilities as well on terms agreed to with various suppliers, while investing in all of the areas required to secure our future and regain our earlier position in the market”, he added. SpiceJet had during December last year shut down its operations for a day as it failed to pay off its dues on account of financial crunch which saw the ownership of the airline changing hands from then promoter Kalanithi Maran to former co-founder Ajay Singh.
Singh, who currently holds about 60% stake in the airline, has pumped in Rs 650 crore —which included Rs 400 crore liabilities and Rs 200 crore of bank loans — since he took over the company in January.
“We are working hard to build a world class airline again. These results show that we are on the right path,” SpiceJet’s chairman Ajay Singh said in a statement.
“This is the second consecutive profitable quarter and I am proud of what we have achieved. But there is still a long way to go. I am confident that the best is still ahead of us. We will continue to focus on growth and on getting operational reliability and on-time performance back to world class standards,” he added.